Page:United States Statutes at Large Volume 100 Part 3.djvu/511

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2319

SEC. 673. TREATMENT OF TAXABLE MORTGAGE POOLS.

Section 7701, as amended by section 201(c), is amended by redesignating subsection (i) as subsection (j) and by inserting after subsection (h) the following new subsection: "(i) TAXABLE MORTGAGE POOLS.— "(1) TREATED AS SEPARATE CORPORATIONS.—A

taxable mortgage pool shall be treated as a separate corporation which may not be treated as an includible corporation with any other corporation for purposes of section 1501. "(2) TAXABLE MORTGAGE POOL DEFINED.—For purposes of this title— "(A) IN GENERAL.—Except as otherwise provided in this paragraph, a taxable mortgage pool is any entity (other than a HEMIC) if— "(i) substantially all of the assets of such entity consists of debt obligations (or interests therein) and more than 50 percent of such debt obligations (or interests) consists of real estate mortgages (or interests therein), "(ii) such entity is the obligor under debt obligations with 2 or more maturities, and "(iii) under the terms of the debt obligations referred to in clause (ii) (or underlying arrangement), payments on such debt obligations bear a relationship to payments on the debt obligations (or interests) referred to in clause (i). "(B) PORTION OF ENTITIES TREATED AS POOLS.—Any portion of an entity which meets the definition of subparagraph (A) shall be treated as a taxable mortgage pool. "(C) EXCEPTION FOR DOMESTIC BUILDING AND LOAN.—Noth-

ing in this subsection shall be construed to treat any domestic building and loan association (or portion thereof) as a taxable mortgage pool. "(D) TREATMENT OF CERTAIN EQUITY INTERESTS.—To the

extent provided in regulations, equity interest of varying classes which correspond to maturity classes of debt shall be treated as debt for purposes of this subsection. "(3) TREATMENT OF CERTAIN REIT'S.—If—

"(A) a real estate investment trust is a taxable mortgage pool, or "(B) a qualified REIT subsidiary (as defined in section 856(i)(2)) of a real estate investment trust is a taxable mortgage pool, under regulations prescribed by the Secretary, adjustments similar to the adjustments provided in section 860E(d) shall apply to the shareholders of such real estate investment trust." SEC. 674. COMPLIANCE PROVISIONS.

Subsection (d) of section 6049 (relating to returns regarding payments of interest) is amended by adding at the end thereof the following new paragraph: "(7) INTERESTS INSTRUMENTS.—

IN

REMIC'S

AND

CERTAIN

OTHER

DEBT

"(A) IN GENERAL.—For purposes of subsection (a), the term 'interest' includes amounts includible in gross income with respect to regular interests in REMIC's.

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