Page:United States Statutes at Large Volume 100 Part 3.djvu/510

 100 STAT. 2318

PUBLIC LAW 99-514—OCT. 22, 1986 clause (x) and inserting in lieu thereof ", and", and by inserting after clause (x) the following new clause: "(xi) any regular or residual interest in a REMIC, but only in the proportion which the assets of such REMIC consist of property described in any of the preceding clauses of this subparagraph; except that if 95 percent or more of the assets of such REMIC are loans described in clauses (i) through (x), the entire interest in the REMIC shall qualify." (4) TREATMENT FOR PURPOSES OF SECTION 582(C).—Paragraph

(1) of section 582(c) is amended by adding at the end thereof the following new sentence: "For purposes of the preceding sentence, any regular or residual interest in a REMIC shall be treated as an evidence of indebtedness." SEC. 672. RULES FOR ACCRUING ORIGINAL ISSUE DISCOUNT ON REGULAR INTERESTS AND SIMILAR DEBT INSTRUMENTS.

Subsection (a) of section 1272 (relating to current inclusion in income of original issue discount) is amended by redesignating paragraph (6) as paragraph (7) and by inserting after paragraph (5) the following new paragraph: "(6) DETERMINATION OF DAILY PORTIONS WHERE PRINCIPAL SUBJECT TO ACCELERATION.—

"(A) IN GENERAL.—In the case of any debt instrument to which this paragraph applies, the daily portion of the original issue discount shall be determined by allocating to each day in any accrual period its ratable portion of the excess (if any)of^ "(i) the sum of (I) the present value determined under subparagraph (B) of all remaining payments under the debt instrument as of the close of such period, and (II) the payments during the accrual period of amounts included in the stated redemption price of the debt instrument, over "(ii) the adjusted issue price of such debt instrument at the beginning of such period. "(B) DETERMINATION OF PRESENT VALUE.—For purposes of

subparagraph (A), the present value shall be determined on the basis of— "(i) the original yield to maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period), "(ii) events which have occurred before the close of the accrual period, and "(iii) a prepayment assumption determined in the manner prescribed by regulations. "(C) DEBT INSTRUMENTS TO WHICH PARAGRAPH APPLIES.—

This paragraph applies to— "(i) any regular interest in a REMIC or qualified mortgage held by a REMIC, or "(ii) any other debt instrument if payments under such debt instrument may be accelerated by reason of prepayments of other obligations securing such debt instrument (or, to the extent provided in regulations, by reason of other events)."

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