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Schedule M

who was a residual interest holder at any

weekly, or daily computation period must

time during the quarter. File Schedule Q

be applied uniformly during the calendar

Reconciliation of Residual

with Form 1066. Give one copy to the

quarter to both categories of assets, and

Interest Holders' Capital

residual interest holder by the last day of

may not be changed in succeeding

Accounts

the month following the month in which the

calendar quarters without IRS consent. If

calendar quarter ends. Keep one copy

the percentage of the REMIC's assets for

Show what caused the changes in the

with a copy of Form 1066 as part of the

either category is at least 95%, the REMIC

residual interest holders' capital accounts

REMIC's records.

may show “95 or more” for that category in

during the tax year.

item C.

Specific Instructions

The amounts shown should agree with

If less than 95% of the assets of the

the REMIC's books and records and the

On each Schedule Q, enter the name,

REMIC are real estate assets (as defined

balance sheet amounts. Attach a

address, and identifying number for each

in section 856(c)(5)(B)), the REMIC must

statement explaining any differences.

residual interest holder and REMIC. For

also report to any real estate investment

each residual interest holder that is an

Include in column (d):

trust that holds a residual interest the

individual, you must enter the residual

Tax-exempt interest income,

information specified in Regulations

interest holder's social security number

Other tax-exempt income,

section 1.860F-4(e)(1)(ii)(B). However, if a

(SSN) (or individual taxpayer identification

Income from prohibited transactions,

REMIC is an “eligible REMIC” as defined

number (ITIN) for a resident or

Income recorded on the REMIC's

in Notice 2012-5, and a percentage of its

nonresident alien). For all other residual

books but not included on this return, and

assets represented by either of the

interest holders, you must enter the

Allowable deductions not charged

categories of assets described under

residual interest holder's EIN. However, if

against book income this year.

REMIC assets, earlier, was less than 95%

a residual interest holder is an IRA, enter

but at least 80%, then the REMIC need

Include in column (e):

the identifying number of the IRA trust.

only specify in item C that the percentage

Capital losses over the $3,000 limitation

Don't enter the SSN (or ITIN) of the

for that category was at least 80%. For

(for a REMIC with a startup day before

individual for whom the IRA is maintained.

more information, see Notice 2012-5

November 12, 1991),

available on page 291 of Internal Revenue

Item A—What type of entity is this re-

Other nondeductible amounts (such as

Bulletin 2012-3 at

IRS.gov/irb12-03_IRB/

sidual interest holder? State on this line

losses from prohibited transactions and

ar11.html.

whether the residual interest holder is an

expenses connected with the production

individual, a corporation, an estate, a trust,

of tax-exempt income),

Item F—Reconciliation of residual in-

a partnership, an exempt organization, a

Deductions allocable to prohibited

terest holder's capital account. See

nominee (custodian), or another REMIC. If

transactions,

the instructions for Schedule M, earlier.

the residual interest holder is a nominee,

Expenses recorded on books not

Line 1a—Taxable income (net loss) of

use the following codes to indicate in

deducted on this return, and

the REMIC for the calendar quarter.

parentheses the type of entity the nominee

Taxable income not recorded on the

Enter the REMIC's taxable income (net

represents:

books this year.

loss) for the calendar quarter. The sum of

I – Individual, C – Corporation, F – Estate

the totals for the 4 quarters in the calendar

or Trust, P – Partnership, E – Exempt

Schedule Q

year must equal the amount shown on

Organization, R – REMIC, or IRA –

Quarterly Notice to

Form 1066, Section I, line 15.

Individual Retirement Arrangement.

Residual Interest Holder of

Line 1b—Your share of the taxable in-

Item B—Residual interest holder's per-

come (net loss) for the calendar quar-

centage of ownership. Enter in item B2

REMIC Taxable Income or

ter. Enter the residual interest holder's

the percentage at the end of the calendar

Net Loss Allocation

share of the taxable income (net loss)

quarter. However, if a residual interest

shown on line 1a (determined by adding

holder's percentage of ownership

Purpose of Schedule

the holder's daily portions under section

changed during the quarter, enter in item

860C(a)(2) for each day in the quarter the

Schedule Q (Form 1066) shows each

B1 the percentage immediately before the

holder held the residual interest). If line 1a

residual interest holder's share of the

change. If there are multiple changes in

is a loss, enter the residual interest

REMIC's quarterly taxable income (or net

the percentage of ownership during the

holder's full share of the loss, without

loss), the excess inclusion for the residual

quarter, attach a statement giving the date

regard to the adjusted basis of the residual

interest holder's interest, and the residual

and percentage before each change.

interest holder's interest in the REMIC.

interest holder's share of the REMIC's

Item C—REMIC assets. Enter in item C

section 212 expenses for the quarter.

Line 2a—Sum of the daily accruals un-

the percentage of the REMIC's assets

der section 860E for all residual inter-

Although the REMIC isn't subject to

during the calendar quarter represented

income tax (except on net income from

ests for the calendar quarter. Enter the

by each of the following categories of

product of the sum of the adjusted issue

prohibited transactions, net income from

assets:

prices of all residual interests at the

foreclosure property, and contributions

Real estate assets under section 856(c)

beginning of the quarter and 120% of the

made after the startup day), the residual

(5)(B), and

long-term federal rate (determined on the

interest holders are liable for tax on their

Assets described in section 7701(a)

basis of compounding at the end of each

shares of the REMIC's taxable income,

(19)(C) (relating to the definition of a

quarter and properly adjusted for the

whether or not distributed, and must

domestic building and loan association).

length of such quarter). See section

include their shares on their tax returns.

These percentages must be computed

860E(c) for details.

using the average adjusted basis of the

Note. Schedule Q (Form 1066) is a

assets held during the calendar quarter.

Line 2b—Sum of the daily accruals un-

separate tax form that isn't part of Form

To do this, the REMIC must make the

der section 860E for your interest.

1066.

appropriate computation as of the close of

Enter zero if line 2a is zero. Otherwise,

General Instructions

each month, week, or day and then

divide the amount shown on line 2a by the

average the monthly, weekly, or daily

number of days in the quarter. Multiply the

For each calendar quarter, complete

percentages for the quarter. The monthly,

result by the residual interest holder's

Schedule Q (Form 1066) for each person

-7-

Instructions For Form 1066 - U.s. Real Estate Mortgage Investment Conduit (Remic) Income Tax Return - 2017 Page 7

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