26 U.S.C. § 860F: Other rules

There is hereby imposed for each taxable year of a REMIC a tax equal to 100 percent of the net income derived from prohibited transactions. the substitution of a qualified replacement mortgage for a qualified mortgage (or the repurchase in lieu of substitution of a defective obligation), a disposition incident to the foreclosure, default, or imminent default of the mortgage, the bankruptcy or insolvency of the REMIC, or a qualified liquidation. The receipt of any income attributable to any asset which is neither a qualified mortgage nor a permitted investment. The receipt by the REMIC of any amount representing a fee or other compensation for services. Gain from the disposition of any cash flow investment other than pursuant to any qualified liquidation. For purposes of paragraph (1), the term “net income derived from prohibited transactions” means the excess of the gross income from prohibited transactions over the deductions allowed by this chapter which are directly connected with such transactions; except that there shall not be taken into account any item attributable to any prohibited transaction for which there was a loss. the REMIC adopts a plan of complete liquidation, such REMIC sells all its assets (other than cash) within the liquidation period, and all proceeds of the liquidation (plus the cash), less assets retained to meet claims, are credited or distributed to holders of regular or residual interests on or before the last day of the liquidation period. beginning on the date of the adoption of the plan of liquidation, and ending at the close of the 90th day after such date. required to prevent default on a regular interest where the threatened default resulted from a default on 1 or more qualified mortgages, or to facilitate a clean-up call (as defined in regulations). No gain or loss shall be recognized to the transferor on the transfer of any property to a REMIC in exchange for regular or residual interests in such REMIC. The adjusted bases of the regular and residual interests received in a transfer described in subparagraph (A) shall be equal to the aggregate adjusted bases of the property transferred in such transfer. Such amount shall be allocated among such interests in proportion to their respective fair market values. in the case of a regular interest, such excess shall be included in gross income (as determined under rules similar to rules of section 1276(b)), and in the case of a residual interest, such excess shall be included in gross income ratably over the anticipated period during which the REMIC will be in existence. in the case of a regular interest, such excess shall be allowable as a deduction under rules similar to the rules of section 171, and in the case of a residual interest, such excess shall be allowable as a deduction ratably over the anticipated period during which the REMIC will be in existence. The basis of any property received by a REMIC in a transfer described in paragraph (1)(A) shall be its fair market value immediately after such transfer. notwithstanding any other provision of this subtitle, gain shall be recognized to such REMIC on the distribution in the same manner as if it had sold such property to the distributee at its fair market value, and the basis of the distributee in such property shall be its fair market value. any residual interest in a REMIC shall be treated as a security, and except as provided in regulations, any residual interest in any REMIC and any interest in a taxable mortgage pool (as defined in section 7701(i)) comparable to a residual interest in a REMIC shall be treated as substantially identical stock or securities, and subsections (a) and (e) of such section shall be applied by substituting “6 months” for “30 days” each place it appears. For purposes of subtitle F, a REMIC shall be treated as a partnership (and holders of residual interests in such REMIC shall be treated as partners). Any return required by reason of the preceding sentence shall include the amount of the daily accruals determined under section 860E(c). Such return shall be filed by the REMIC. The determination of who may sign such return shall be made without regard to the first sentence of this subsection.