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appropriate, to report accrued income of

due date (including extensions), or (b) the

its issue price, the excess is deductible

$10 or more of regular interest holders.

return does not show all the information

ratably over the anticipated weighted

See Regulations section 1.6049-7. Also,

required, unless each failure is due to

average life of the REMIC (as defined in

every REMIC must file Forms 1099-MISC

reasonable cause. If the failure is due to

Regulations section 1.860E-1(a)(3)(iv)).

if it makes payments of rents,

reasonable cause, attach an explanation

Payments Subject to

commissions, or other fixed or

to the return. If no taxes are due, the

Withholding at Source

determinable income (see section 6041)

penalty is $50 for each month or part of a

totaling $600 or more to any one person

month (up to 5 months) the return is late

If there are any nonresident alien

in the course of its trade or business

or does not include the required

individuals, foreign partnerships, or

during the calendar year.

information, multiplied by the total number

foreign corporations as regular interest

of persons who were residual interest

Form 8275, Disclosure Statement, and

holders or residual interest holders, and

holders in the REMIC during any part of

Form 8275-R, Regulation Disclosure

the REMIC has items of gross income

the REMIC’s tax year for which the return

Statement. Use these forms to disclose

from sources within the United States

is due. If tax is due, the penalty is the

items or positions taken on a tax return

(see sections 861 through 865), see

amount stated above plus 5% of the

that are not otherwise adequately

Form 1042, Annual Withholding Tax

unpaid tax for each month or part of a

disclosed on the return or that are

Return for U.S. Source Income of Foreign

month the return is late, up to a maximum

contrary to Treasury regulations (to avoid

Persons.

of 25% of the unpaid tax, or if the return

parts of the accuracy-related penalty or

is more than 60 days late, a $100

Who Must Sign

certain preparer penalties).

minimum or the balance of tax due on the

Form 8300, Report of Cash Payments

Startup day after November 9, 1988.

return, whichever is smaller.

Over $10,000 Received in a Trade or

For a REMIC with a startup day after

Late payment penalty. The penalty for

Business. Generally, this form is used to

November 9, 1988, Form 1066 may be

not paying the tax when due is usually

report the receipt of more than $10,000 in

signed by any person who could sign the

of 1% of the unpaid tax for each month or

cash or foreign currency in one

return of the entity in the absence of the

part of a month the tax is unpaid. The

transaction (or a series of related

REMIC election. Thus, the return of a

penalty cannot exceed 25% of the unpaid

transactions).

REMIC that is a corporation or trust would

tax. The penalty will not be charged if you

Form 8811, Information Return for Real

be signed by a corporate officer or a

can show reasonable cause for not

Estate Mortgage Investment Conduits

trustee, respectively. For REMICs with

paying on time.

(REMICs) and Issuers of Collateralized

only segregated pools of assets, the

Other penalties. Penalties can also be

Debt Obligations. A REMIC uses this form

return would be signed by any person

imposed for negligence, substantial

to provide the information required by

who could sign the return of the entity

understatement of tax, and fraud. See

Regulations section 1.6049-7(b)(1)(ii).

owning the assets of the REMIC under

sections 6662 and 6663.

This information will be published in Pub.

applicable state law.

938, Real Estate Mortgage Investment

Contributions to the REMIC

Startup day before November 10, 1988.

Conduits (REMICs) Reporting

A REMIC with a startup day before

Generally, no gain or loss is recognized

Information. This publication contains a

November 10, 1988, may elect to apply

by the REMIC or any of the regular or

directory of REMICs.

the rules for REMICs with a startup day

residual interest holders when property is

Note: Pub. 938 is not printed. Instead, it

after November 9, 1988 (as described in

transferred to the REMIC in exchange for

is available on CD-ROM or the Internet.

Regulations section 1.860F-4(c)(2)(iii)).

an interest in the REMIC. The adjusted

See How To Get Forms and

Otherwise, Form 1066 must be signed by

basis of the interest received equals the

Publications on page 1 of the

a residual interest holder or, as provided

adjusted basis of the property transferred

instructions for details.

in section 6903, by a fiduciary as defined

to the REMIC.

Form 8822, Change of Address, may be

in section 7701(a)(6) who is acting for the

The basis to the REMIC of property

used to inform the IRS of a new REMIC

REMIC and who has furnished adequate

transferred by a regular or residual

address if the change is made after filing

notice as described in Regulations

interest holder is its fair market value

Form 1066.

section 301.6903-1(b).

immediately after its transfer.

Payment of Tax Due

Note: For this purpose, the term “startup

If the issue price of a regular interest is

day” means any day selected by a

more than its adjusted basis, the excess

The REMIC must pay the tax due (line 3,

REMIC that is on or before the first day

Section II, page 1) in full by the 15th day

is included in income by the regular

on which interests in such REMIC are

interest holder for the applicable tax years

of the 4th month following the end of the

issued. Otherwise, “startup day” is

as if the excess were market discount on

tax year. Enclose with Form 1066 a check

defined in the instructions for Item B on

a bond and the holder had made an

or money order for the amount due

page 4.

election under section 1278(b) to include

payable to the “United States Treasury.”

this market discount currently. If the issue

Facsimile signature. A facsimile

Interest and Penalties

price of a residual interest is more than its

signature is acceptable if the following

adjusted basis, the excess is amortized

Interest. Interest is charged on taxes not

conditions are met:

•

and included in the residual interest

paid by the due date, even if an extension

Each group of returns sent to the IRS

holder’s income ratably over the

of time to file is granted. Interest is also

must be accompanied by a letter signed

anticipated weighted average life of the

charged on penalties imposed for failure

by the person authorized to sign the

REMIC (as defined in Regulations section

to file, negligence, fraud, gross valuation

returns declaring, under penalties of

1.860E-1(a)(3)(iv)).

overstatement, and substantial

perjury, that the facsimile signature

understatement of tax from the due date

If the adjusted basis of a regular

appearing on the returns is the signature

(including extensions) to the date of

interest is more than its issue price, the

adopted by that person to sign the returns

payment. The interest charge is figured at

regular interest holder treats the excess

filed and that the signature was affixed to

a rate determined under section 6621.

as amortizable bond premium subject to

the returns by that person or at that

Late filing penalty. A penalty may be

the rules of section 171. If the adjusted

person’s direction. The letter must also

charged if (a) the return is filed after the

basis of a residual interest is more than

list each return by the name and

-3-

Instructions For Form 1066 - U.s. Real Estate Mortgage Investment Conduit (Remic) Income Tax Return - 2002 Page 3

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