Page:United States Statutes at Large Volume 110 Part 3.djvu/133

 PUBLIC LAW 104-188—AUG. 20, 1996 110 STAT. 1863 tially all of the assets of which (including assets treated as held by the entity under section 8601(b)(2)) consist of permitted assets, and "(E) which is not described in section 851(a). A rule similar to the rule of the last sentence of section 860D(a) shall apply for purposes of this paragraph. " (2) ELIGIBLE CORPORATION. — For purposes of paragraph (1)(C), the term 'eligible corporation' means any domestic C corporation other than— "(A) a corporation which is exempt from, or is not subject to, tax under this chapter, "(B) an entity described in section 851(a) or 856(a), "(C) a REMIC, and "(D) an organization to which part I of subchapter T applies. "(3) ELECTION. —An entity (otherwise meeting the requirements of paragraph (1)) may elect to be treated as a FASIT. Except as provided in paragraph (5), such an election shall apply to the taxable year for which made and all subsequent taxable years unless revoked with the consent of the Secretary. "(4) TERMINATION.— If any entity ceases to be a FASIT at any time during the taxable year, such entity shall not be treated as a FASIT after the date of such cessation. " (5) INADVERTENT TERMINATIONS, ETC.— Rules similar to the rules of section 860D(b)(2)(B) shall apply to inadvertent failures to qualify or remain qualified as a FASIT. " (6) PERMITTED ASSETS NOT TREATED AS INTEREST IN FASIT. —Except as provided in regulations prescribed by the Secretary, any asset which is a permitted asset at the time acquired by a FASIT shall not be treated at any time as an interest in such FASIT. "(b) INTERESTS IN FASIT. —For purposes of this part— " (1) REGULAR INTEREST.— "(A) IN GENERAL.— The term 'regular interest' means any interest which is issued by a FASIT after the startup date with fixed terms and which is designated as a regular interest if— "(i) such interest unconditionally entitles the holder to receive a specified principal amount (or other similar amount), "(ii) interest payments (or other similar amounts), if any, with respect to such interest are determined based on a fixed rate, or, except as otherwise provided by the Secretary, at a variable rate permitted under section 860G(a)(l)(B)(i), "(iii) such interest does not have a stated maturity (including options to renew) greater than 30 years (or such longer period as may be permitted by regulations), "(iv) the issue price of such interest does not exceed 125 percent of its stated principal amount, and "(v) the yield to maturity on such interest is less than the sum determined under section 163(i)(l)(B) with respect to such interest. An interest shall not fail to meet the requirements of clause (i) merely because the timing (but not the amount) of the principal payments (or other similar amounts) may

�