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Note: An owner of a foreign trust must

Line 7 — Regular interests are interests

ensure that the trust files an annual

in the REMIC that are issued on the

Schedule Q—Quarterly

information return on Form 3520-A,

startup day with fixed terms and that are

Annual Information Return of Foreign

designated as regular interests, if:

Notice to Residual Interest

Trust With a U.S. Owner. For details, see

1. Such interest unconditionally

the Instructions for Form 3520-A.

Holder of REMIC Taxable

entitles the holder to receive a specified

To report information required under

principal amount or other similar amounts;

Income or Net Loss

section 6038B the REMIC may be

and

Allocation

required to file Form 926, Return by a

2. Interest payments (or similar

U.S. Transferor of Property to a Foreign

amounts), if any, with respect to the

Purpose of Schedule

Corporation, or Form 8865, Return of

interest at or before maturity are payable

U.S. Persons With Respect to Certain

based on a fixed rate (or at a variable rate

Schedule Q (Form 1066) shows each

Foreign Partnerships. See the instructions

described in Regulations section

residual interest holder’s share of the

for these forms for more information.

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

REMIC’s quarterly taxable income (net

portion of the interest payments on

loss), the excess inclusion for the residual

Item L — Sum of the daily accruals.

qualified mortgages and this portion does

interest holder’s interest, and the residual

Enter the total of the daily accruals for all

not vary during the period that the interest

interest holder’s share of the REMIC’s

residual interests for the calendar year.

is outstanding.

section 212 expenses for the quarter.

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

The interest will meet the requirements

Although the REMIC is not subject to

Schedule L—Balance Sheets

income tax (except on net income from

of 1 above even if the timing (but not the

per Books

prohibited transactions, net income from

amount) of the principal payments (or

other similar amounts) is contingent on

foreclosure property, and contributions

The amounts shown should agree with

the extent of prepayments on qualified

made after the startup day), the residual

the REMIC’s books and records. Attach a

interest holders are liable for tax on their

mortgages and the amount of income

statement explaining any differences.

shares of the REMIC’s taxable income,

from permitted investments.

Line 1a — Cash flow investments are

whether or not distributed, and must

Schedule M—Reconciliation of

any investments of amounts received

include their shares on their tax returns.

Residual Interest Holders’

under qualified mortgages for a temporary

General Instructions

period (not more than 13 months) before

Capital Accounts

distribution to holders of interests in the

For each calendar quarter complete

Show what caused the changes in the

REMIC.

Schedule Q (Form 1066) for each person

residual interest holders’ capital accounts

who was a residual interest holder at any

during the tax year.

Line 1b — Qualified reserve assets

time during the quarter. File Schedule Q

include any intangible property that is

The amounts shown should agree with

with Form 1066; give one copy to the

held for investment and as part of any

the REMIC’s books and records and the

residual interest holder by the last day of

reasonably required reserve to provide for

balance sheet amounts. Attach a

the month following the month in which

full payment of expenses of the REMIC or

statement explaining any differences.

the calendar quarter ends; and, keep one

amounts due on regular interests in the

Include in column (d): tax-exempt

copy with a copy of Form 1066 as part of

event of defaults on qualified mortgages

interest income, other tax-exempt income,

the REMIC’s records.

or lower than expected returns on cash

income from prohibited transactions,

flow investments. No more than 30% of

Specific Instructions

income recorded on the REMIC’s books

the gross income from such assets may

but not included on this return, and

On each Schedule Q, enter the names,

be derived from the sale or disposition of

allowable deductions not charged against

addresses, and identifying numbers of the

property held less than 3 months. See

book income this year.

residual interest holder and REMIC. For

section 860G(a)(7)(C) for details and

Include in column (e): capital losses

each residual interest holder that is an

exceptions.

over the $3,000 limitation (for a REMIC

individual, you must enter the residual

Line 1c — Foreclosure property is any

with a startup day before November 12,

interest holder’s social security number

real property (including interests in real

1991), other nondeductible amounts

(SSN) (or individual taxpayer identification

property), and any personal property

(such as losses from prohibited

number (ITIN) for a resident or

incident to such real property, acquired by

transactions and expenses connected

nonresident alien). For all other residual

the REMIC as a result of the REMIC’s

with the production of tax-exempt

interest holders, you must enter the

having bid in the property at foreclosure,

income), deductions allocable to

residual interest holder’s EIN. However, if

or having otherwise reduced the property

prohibited transactions, expenses

a residual interest holder is an individual

to ownership or possession by agreement

recorded on books not deducted on this

retirement arrangement (IRA), enter the

or process of law, after there was a

return, and taxable income not recorded

identifying number of the IRA trust. Do not

default or imminent default on a qualified

on the books this year.

enter the SSN (or ITIN) of the individual

mortgage held by the REMIC. Generally,

for whom the IRA is maintained.

this property ceases to be foreclosure

Item A — What type of entity is this

property at the close of the third tax year

residual interest holder? State on this

following the tax year in which the REMIC

line whether the residual interest holder is

acquired the property. See sections

an individual, a corporation, an estate, a

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

trust, a partnership, an exempt

section 1.856-6 for more details.

organization, a nominee (custodian), or

Note: Solely for purposes of section

another REMIC. If the residual interest

860D(a), the determination of whether

holder is a nominee, use the following

any property is foreclosure property will

codes to indicate in parentheses the type

be made without regard to section

of entity the nominee represents.

856(e)(4).

I – Individual; C – Corporation; F –

-7-

Instructions For Form 1066 - U.s. Real Estate Mortgage Investment Conduit (Remic) Income Tax Return - 2003 Page 7

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