Page:United States Statutes at Large Volume 100 Part 3.djvu/507

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2315

same manner as if it had sold such property to the distributee at its fair market value, and "(2) the basis of the distributee in such property shall be its fair market value. "(d)

COORDINATION WITH WASH SALE RULES.—For purposes of

section 1091— "(1) any residual interest in a REMIC shall be treated as a security, and "(2) in applying such section to any loss claimed to have been sustained on the sale or other disposition of a residual interest in a REMIC— "(A) 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 "(B) subsections (a) and (e) of such section shall be applied by substituting '6 months' for '30 days' each place it appears. "(e) TREATMENT UNDER SUBTITLE F.—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). "SEC. 860G. OTHER DEFINITIONS AND SPECIAL RULES.

"(a) DEFINITIONS.—For purposes of this part— "(1) REGULAR INTEREST.— The term 'regular interest' means an interest in a REMIC the terms of which are fixed on the startup day, and which— "(A) unconditionally entitles the holder to receive a specified principal amount (or other similar amount), and "(B) provides that interest payments (or other similar amounts), if any, at or before maturity are payable based on a fixed rate (or to the extent provided in regulations, at a variable rate). An interest shall not fail to meet the requirements of subparagraph (A) merely because the timing (but not the amount) of the principal payments (or other similar amounts) may be contingent on the extent of prepayments on qualified mortgages and the amount of income from permitted investments. "(2) RESIDUAL INTEREST.—The term 'residual interest' means an interest in a REMIC which is not a regular interest and is designated as a residual interest. '•(3) QUALIFIED MORTGAGE.—The term 'qualified mortgage' means— "(A) any obligation (including any participation or certificate of beneficial ownership therein) which is principally secured, directly or indirectly, by an interest in real property and which— "(i) is transferred to the REMIC on or before the startup day, or "(ii) is purchased by the REMIC within the 3-month period beginning on the startup day, "(B) any qualified replacement mortgage, and "(C) any regular interest in another REMIC transferred to the REMIC on or before the startup day.

�