Page:United States Statutes at Large Volume 102 Part 4.djvu/451

 PUBLIC LAW 100-647—NOV. 10, 1988

102 STAT. 3421

ring on the day during such period selected by the HEMIC for purposes of this paragraph." (F) The amendments made by this paragraph shall not apply 26 USC 860G to any REMIC where the startup day (as defined in section note. 860G(a)(9) of the 1986 Code as in effect on the day before the date of the enactment of this Act) is before July 1, 1987. (6) Paragraph (3) of section 860G(a) of the 1986 Code is amended— (A) by striking out "directly or indirectly," in subparagraph (A), and (B) by adding at the end thereof the following new sentence: "For purposes of this subparagraph, any obligation secured by stock held by a person as a tenant-stockholder (as defined in section 216) in a cooperative housing corporation (as so defined) shall be treated as secured by an interest in real property." (7) Subparagraph (B) of section 860G(a)(7) of the 1986 Code is amended by inserting before the period at the end of the 1st sentence the following: "or lower than expected returns on cash flow investments". (8)(A) Paragraph (8) of section 860G(a) of the 1986 Code is amended— (i) by striking out "section 856(e)" in subparagraph (A) and inserting in lieu thereof "section 856(e) (without regard to paragraph (5) thereof)", and (ii) by striking out the last sentence and inserting in lieu thereof the following: "Solely for purposes of section 860D(a), the determination of whether any property is foreclosure property shall be made without r^ard to section 856(e)(4)." (B) Section 860G of the 1986 Code is amended by redes^ating subsection (c) as subsection (d) and by inserting after subsection (b) the following new subsection: "(c) TAX ON INCOME FROM FORECLOSURE PROPERTY,—

"(1) IN GENERAL.—A tax is hereby imposed for each taxable year on the net income from foreclosure property of each REMIC. Such tax shall be computed by multiplying the net income from foreclosure property by the highest rate of tax specified in section 11(b). "(2) NET INCOME FROM FORECLOSURE PROPERTY.—For purposes of this part, the term 'net income from foreclosure property' means the amount which would be the REMIC's net income from foreclosure property under section 857(b)(4)(B) if the REMIC were a real estate investment trust." (C) Paragraph (1) of section 860C(b) of the 1986 Code is amended by striking out "and" at the end of subparagraph (C), by striking out the period at the end of subparagraph (D) and inserting in lieu thereof ", and", and by adding at the end thereof the following new subparagraph: "(E) the amount of the net income from foreclosure property (if any) shall be reduced by the amount of the tax imposed by section 860G(c)." (9)(A) Section 860G of the 1986 Code (as amended by paragraph (8)) is amended by redesignating subsection (d) as subsection (e) and by inserting after subsection (c) the following new subsection: "(d) TAX ON (k)NTRiBunoNS AFTER STARTUP DATE.—

�