Page:United States Statutes at Large Volume 100 Part 3.djvu/506

 100 STAT. 2314

PUBLIC LAW 99-514—OCT. 22, 1986

111 V

"(iii) 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. "(B) LIQUIDATION PERIOD.—The term liquidation period' means the period— "(i) beginning on the date of the adoption of the plan of liquidation, and "(ii) ending at the close of the 90th day after such date.

"(b) TREATMENT OF TRANSFERS TO THE R E M I C. — "(1) TREATMENT OF TRANSFEROR.— "(A) NONRECOGNITION GAIN OR LOSS.—No

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gain or loss shall be recognized to the transferor on the transfer of any property to a REMIC. "(B) ADJUSTED BASES OF INTERESTS.—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. "(C) TREATMENT OF NONRECOGNIZED GAIN.—If the issue price of any regular or residual interest exceeds its adjusted basis as determined under subparagraph (B), for periods during which such interest is held by the transferor (or by any other person whose basis is determined in whole or in part by reference to the basis of such interest in the hand of the transferor)— "(i) 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 "(ii) in the case of a residual interest, such excess shall be included in gross income ratably over the anticipated period during which the real estate mortgage pool will be in existence. "(D) TREATMENT OF NONRECOGNIZED LOSS.—If the adjusted basis of any regular or residual interest received in a transfer described in subparagraph (A) exceeds its issue price, for periods during which such interest is held by the transferor (or by any other person whose basis is determined in whole or in part by reference to the basis of such interest in the hand of the transferor)— "(i) 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 "(ii) in the case of a residual interest, such excess shall be allowable as a deduction ratably over the anticipated period during which the real estate mortgage pool will be in existence. "(2) BASIS TO REMIC.—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. "(c) DISTRIBUTIONS OF PROPERTY.—If a REMIC makes a distribution of property with respect to any regular or residual interest— "(1) notwithstanding any other provision of this subtitle, gain shall be recognized to such REMIC on the distribution in the

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