Page:United States Statutes at Large Volume 102 Part 4.djvu/449

 PUBLIC LAW 100-647—NOV. 10, 1988

102 STAT. 3419

lieu thereof "such calendar year (but computed without regard to that portion of such deduction which is attributable to the amount excluded under section 857(b)(2)(D))". (4) Subsection (a) of section 857 of the 1986 Code is amended by adding at the end thereof the following new sentence: "The Secretary may waive the requirements of paragraph (1) for any taxable year if the real estate investment trust establishes to the satisfaction of the Secretary that it was unable to meet such requirements by reason of distributions previously made to meet the requirements of section 4981." (5) Effective with respect to dividends declared in 1988 and subsequent calendar years, paragraph (8) of section 857(b) of the 1986 Code is amended— (A) by striking out "in December" and inserting in lieu thereof "in October, November, or December", (B) by striking out "in such month" and inserting in lieu thereof "in such a month", (C) by striking out "on such date" in subparagraphs (A) and (B) and inserting in lieu thereof "on December 31 of such calendar year", and (D) by striking out "before February 1" and inserting in lieu thereof "during January". (t) AMENDMENTS RELATED TO SECTION 671 OF THE REFORM ACT.—

(1) Paragraph (1) of section 860ae) of the 1986 Code is amended to read as follows: "(1) AMOUNTS TREATED AS ORDINARY.—Any amount taken into account under subsection (a) by any holder of a residual interest in a REMIC shall be treated as ordinary income or ordinary loss, as the case may be." (2)(A) Paragraph (4) of section 860D(a) of the 1986 Code is amended— (i) by striking out "4th month ending after" and inserting in lieu thereof "3rd month beginning after", and (ii) by striking out "and each quarter ending thereafter" and inserting in lieu thereof "and at all times thereafter". (B) The amendment made by subparagraph (A)(ii) shall take Effective date. effect on January 1, 1988. 26 USC 860D (3)(A) Clause (i) of section 860F(a)(2)(A) of the 1986 Code is ''°^^amended to read as follows: "(i) the substitution of a qualified replacement mortgage for a qualified mortgage (or the repurchase in lieu of substitution of a defective obligation),". (B)(i) Paragraph (2) of section 860F(a) of the 1986 Code is amended by striking out the last sentence of subparagraph (A), (ii) Subsection (a) of section 860F of the 1986 Code is amended by adding at the end thereof the following new paragraph: "(5) EXCEPTIONS.—Notwithstanding subparagraphs (A) and 4 (D) of paragraph (1), the term 'prohibited trsmsaction' shall not include any disposition— "(A) required to prevent default on a regular interest where the threatened default resulted from a default on 1 or more qualified mortggiges, or "(B) to facilitate a clean-up call (as defined in regulations)." (C) Subparagraph (D) of section 860F(a)(2) of the 1986 Code is amended by striking out "described in subsection (b)".

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