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Item L — Sum of the daily accruals.

other similar amounts) is contingent on

interest holder’s interest, and the residual

Enter the total of the daily accruals for all

the extent of prepayments on qualified

interest holder’s share of the REMIC’s

residual interests for the calendar year.

mortgages and the amount of income

section 212 expenses for the quarter.

See section 860E(c)(2) for details.

from permitted investments.

Although the REMIC is not subject to

income tax (except on net income from

An interest will still qualify as a regular

Schedule L

prohibited transactions, net income from

interest even if the specified principal

Balance Sheets per Books

foreclosure property, and contributions

amount of the regular interest (or the

The amounts shown should agree with

made after the startup day), the residual

amount of interest accrued on the regular

the REMIC’s books and records. Attach a

interest holders are liable for tax on their

interest) can be reduced as a result of the

statement explaining any differences.

shares of the REMIC’s taxable income,

nonoccurrence of one or more contingent

whether or not distributed, and must

Line 1a — Cash flow investments.

payments with respect to any reverse

include their shares on their tax returns.

These are any investments of amounts

mortgage loan held by the REMIC if, on

received under qualified mortgages for a

the startup day for the REMIC, the

General Instructions

temporary period (not more than 13

sponsor reasonably believes that all

For each calendar quarter, complete

months) before distribution to holders of

principal and interest due under the

Schedule Q (Form 1066) for each person

interests in the REMIC.

regular interest will be paid at or prior to

who was a residual interest holder at any

the liquidation of the REMIC.

Line 1b — Qualified reserve assets.

time during the quarter. File Schedule Q

The term “qualified reserve asset” means

Schedule M

with Form 1066. Give one copy to the

any intangible property which is held for

Reconciliation of Residual

residual interest holder by the last day of

investment and as part of a qualified

the month following the month in which

Interest Holders’ Capital

reserve fund. For a definition of qualified

the calendar quarter ends. Keep one copy

Accounts

reserve fund, including exceptions, see

with a copy of Form 1066 as part of the

sections 860G(a)(7)(B) and (C).

Show what caused the changes in the

REMIC’s records.

residual interest holders’ capital accounts

Line 1c — Foreclosure property. This is

Specific Instructions

during the tax year.

any real property (including interests in

real property), and any personal property

On each Schedule Q, enter the name,

The amounts shown should agree with

incident to such real property, acquired by

address, and identifying number for each

the REMIC’s books and records and the

the REMIC as a result of the REMIC’s

residual interest holder and REMIC. For

balance sheet amounts. Attach a

having bid in the property at foreclosure,

each residual interest holder that is an

statement explaining any differences.

or having otherwise reduced the property

individual, you must enter the residual

Include in column (d):

to ownership or possession by agreement

interest holder’s social security number

•

Tax-exempt interest income,

or process of law, after there was a

(SSN) (or individual taxpayer identification

•

Other tax-exempt income,

default or imminent default on a qualified

number (ITIN) for a resident or

•

Income from prohibited transactions,

mortgage held by the REMIC. Generally,

nonresident alien). For all other residual

•

Income recorded on the REMIC’s

this property ceases to be foreclosure

interest holders, you must enter the

books but not included on this return, and

property at the close of the third tax year

residual interest holder’s EIN. However, if

•

Allowable deductions not charged

following the tax year in which the REMIC

a residual interest holder is an IRA, enter

against book income this year.

acquired the property. See sections

the identifying number of the IRA trust. Do

Include in column (e):

not enter the SSN (or ITIN) of the

860G(a)(8), 856(e), and Regulations

•

Capital losses over the $3,000

individual for whom the IRA is maintained.

section 1.856-6 for more details.

limitation (for a REMIC with a startup day

Item A — What type of entity is this

Note. Solely for purposes of section

before November 12, 1991),

residual interest holder? State on this

860D(a), the determination of whether

•

Other nondeductible amounts (such as

line whether the residual interest holder is

any property is foreclosure property will

losses from prohibited transactions and

an individual, a corporation, an estate, a

be made without regard to section

expenses connected with the production

trust, a partnership, an exempt

856(e)(4).

of tax-exempt income),

organization, a nominee (custodian), or

•

Line 7 — Regular interests. These are

Deductions allocable to prohibited

another REMIC. If the residual interest

interests in the REMIC that are issued on

transactions,

holder is a nominee, use the following

•

the startup day with fixed terms and that

Expenses recorded on books not

codes to indicate in parentheses the type

are designated as regular interests, if:

deducted on this return, and

of entity the nominee represents:

•

1. Such interest unconditionally

Taxable income not recorded on the

I – Individual, C – Corporation, F –

entitles the holder to receive a specified

books this year.

Estate or Trust, P – Partnership, E –

principal amount or other similar amounts;

Exempt Organization, R – REMIC, or IRA

and

– Individual Retirement Arrangement.

2. Interest payments (or similar

Schedule Q

Item B — Residual interest holder’s

amounts), if any, with respect to the

Quarterly Notice to

percentage of ownership. Enter in item

interest at or before maturity are payable

B2 the percentage at the end of the

based on a fixed rate (or at a variable rate

Residual Interest Holder of

calendar quarter. However, if a residual

described in Regulations section

interest holder’s percentage of ownership

REMIC Taxable Income or

1.860G-1(a)(3)), or consist of a specified

changed during the quarter, enter in item

portion of the interest payments on

Net Loss Allocation

B1 the percentage immediately before the

qualified mortgages and this portion does

change. If there are multiple changes in

not vary during the period that the interest

Purpose of Schedule

the percentage of ownership during the

is outstanding.

quarter, attach a statement giving the

Schedule Q (Form 1066) shows each

date and percentage before each change.

The interest will meet the requirements

residual interest holder’s share of the

of 1 even if the timing (but not the

REMIC’s quarterly taxable income (or net

Item C — REMIC assets. Enter in item C

amount) of the principal payments (or

loss), the excess inclusion for the residual

the percentage of the REMIC’s assets

-7-

Instructions For Form 1066 - U.s. Real Estate Mortgage Investment Conduit (Remic) Income Tax Return - 2005 Page 7

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