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you should include this tax (from

fund or other regulated investment

stock and mutual funds. Also, adjust the

Schedule J, line 10) on line 11.

company.

basis for any stock splits.

For details, see Pub. 564, Mutual Fund

See section 852(f) for the treatment of

Note. See section 164(d) for

Distributions.

certain load charges incurred in acquiring

apportionment of taxes on real property

stock in a mutual fund with a reinvestment

between the seller and purchaser.

Losses on worthless securities. If any

right.

securities that are capital assets become

Enter taxes accrued during the tax

worthless during the tax year, the loss is a

Increase the cost or other basis by any

year but do not include the following:

•

loss from the sale or exchange of capital

expense of sale, such as broker’s fee,

Federal income taxes (except the tax

assets as of the last day of the tax year.

commission, and option premium, before

on net income from foreclosure property);

•

Losses from wash sales. The REMIC

making an entry in column (e), unless the

Foreign or U.S. possession income

cannot deduct losses from a wash sale of

REMIC reported net sales price in column

taxes;

•

stock or securities. A wash sale occurs if

Taxes not imposed on the REMIC; or

(d).

•

the REMIC acquires (by purchase or

Taxes, including state or local sales

For details, see Pub. 551, Basis of

exchange), or has a contract or option to

taxes, that are paid or incurred in

Assets.

acquire, substantially identical stock or

connection with an acquisition or

Schedule J

securities within 6 months before or after

disposition of property. Such taxes must

the date of the sale or exchange. See

be treated as a part of the cost of the

Part I —Tax on Net Income from

section 860F(d) for details.

acquired property or, in the case of a

Prohibited Transactions

disposition, as a reduction in the amount

Installment sales. If the REMIC sold

realized on the disposition.

property (except publicly traded stock or

Losses not included. Do not net losses

securities) at a gain and will receive any

Line 12 — Depreciation. See the

from prohibited transactions against

payment in a tax year after the year of

instructions for Form 4562, Depreciation

income or gains from prohibited

sale, it must use the installment method

and Amortization, or Pub. 946, How To

transactions in determining the amounts

and Form 6252, Installment Sale Income,

Depreciate Property, to figure the amount

to enter on lines 1a through 1d. These

unless it elects not to use the installment

of depreciation to enter on this line. You

losses are not deductible in computing

method.

must complete and attach Form 4562 if

net income from prohibited transactions.

the REMIC placed property in service

If the REMIC wants to elect out of the

For purposes of lines 1a and 1d, the

installment method, it must report the full

during 2005, claims a section 179

term “prohibited transactions” does not

expense deduction, or claims

amount of the gain on a timely filed return

include any disposition that is required to

(including extensions). If the REMIC filed

depreciation on any car or other listed

prevent default on a regular interest

property.

its original return on time without making

where the threatened default resulted

the election, it may make the election on

Line 13 — Other deductions. Attach a

from a default on one or more qualified

an amended return filed not later than 6

schedule, listing by type and amount, any

mortgages, or to facilitate a clean-up call.

months after the due date of the return

other allowable deductions for which no

A clean-up call is the redemption of a

(excluding extensions). Write “Filed

line is provided on Form 1066. If there is

class of regular interests when, by reason

pursuant to section 301.9100-2” at the top

only one item of other deductions,

of prior payments with respect to those

of the amended return.

describe it in parentheses to the left of the

interests, the administrative costs

entry on line 13 instead of attaching a

Specific Instructions

associated with servicing that class

schedule.

outweigh the benefits of maintaining the

Column (d) — Sales price. Enter either

class. It does not include the redemption

the gross sales price or the net sales

Schedule D

of a class in order to profit from a change

price from the sale. On sales of stocks

in interest rates.

and bonds, report the gross amount as

General Instructions

Line 1a — Gain from certain

reported to the REMIC by the REMIC’s

Purpose of schedule. For a REMIC with

dispositions of qualified mortgages.

broker on Form 1099-B, Proceeds From

a startup day before November 12, 1991,

Enter the amount of gain from the

Broker and Barter Exchange

use Schedule D to report the sale or

disposition of any qualified mortgage

Transactions, or similar statement.

exchange of capital assets. To report

transferred to the REMIC other than a

However, if the broker advised the

sales or exchanges of property other than

disposition from:

REMIC that gross proceeds (gross sales

•

capital assets, see Form 4797 and its

The substitution of a qualified

price) minus commissions and option

instructions.

replacement mortgage for a qualified

premiums were reported to the IRS, enter

mortgage or the repurchase in lieu of

that net amount in column (d).

A REMIC with a startup day after

substitution of a defective obligation;

November 11, 1991, must use Form 4797

Column (e) — Cost or other basis. In

•

The foreclosure, default, or imminent

instead of Schedule D because all of its

general, the cost or other basis is the cost

default of the mortgage;

gains and losses from the sale or

of the property plus purchase

•

The bankruptcy or insolvency of the

exchange of any property are treated as

commissions and improvements, minus

REMIC; or

ordinary gains and losses.

depreciation. If the REMIC got the

•

A qualified liquidation.

property in a tax-free exchange,

Report every sale or exchange of

See section 860F(a) for details and

involuntary conversion, or wash sale of

property in detail, even though there is no

exceptions.

stock, it may not be able to use the actual

gain or loss.

cash cost as the basis. If the REMIC uses

Line 1b — Income from nonpermitted

For details, see Pub. 544, Sales and

a basis other than cash cost, attach an

assets. Enter the amount of any income

Other Dispositions of Assets.

explanation.

received or accrued during the year

Capital gain distributions. On line 7,

When selling stock, adjust the basis by

attributable to any asset other than a

report the sum of capital gain distributions

subtracting all the nontaxable distributions

qualified mortgage or permitted

and the REMIC’s share of the

received before the sale. This includes

investment. See section 860G(a) for

undistributed capital gain from a mutual

nontaxable dividends from utility company

definitions.

-5-

Instructions For Form 1066 - U.s. Real Estate Mortgage Investment Conduit (Remic) Income Tax Return - 2005 Page 5

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