Schedule Q (Form 1066) - Quarterly Notice To Residual Interest Holder Of Remic Taxable Income Or Net Loss Allocation Page 2
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Schedule Q (Form 1066) (Rev. 12-2008)
Page
Calendar year taxpayers and fiscal year taxpayers
Instructions for Residual Interest Holder
whose tax years end with a calendar quarter
Section references are to the Internal Revenue Code unless otherwise
Line 1b—Your share of the taxable income (net loss) for the calendar
noted.
quarter. If you are an individual, you must report, as ordinary income or
loss, the total of the amounts shown on line 1b of Schedule Q for each
Purpose of Schedule
quarter included in your tax year, after applying any basis limitations, on
The real estate mortgage investment conduit (REMIC) uses Schedule Q to
Schedule E (Form 1040), Part IV, column (d). If you are not an individual,
notify you of your share of the REMIC’s quarterly taxable income (or net
report the amounts as instructed on your tax return.
loss), the excess inclusion with respect to your interest, and your share of
Line 2c—Excess inclusion for the calendar quarter for your residual
the REMIC’s section 212 expenses for the quarter.
interest. The total of the amounts shown on line 2c for all quarters
Keep your copy of this schedule for your records. Do not file it with
included in your tax year is the smallest amount you may report for that
your tax return.
year as your:
Tax treatment of REMIC items. The REMIC is not subject to income tax
Taxable income or
(except on net income from prohibited transactions, net income from
Alternative minimum taxable income (AMTI).
foreclosure property, and contributions made after the startup day).
However, you are liable for tax on your share of the REMIC’s taxable
Except where necessary or appropriate to prevent avoidance of Federal
income, whether or not distributed, and you must include your share on
income tax the preceding sentence does not apply to a financial
your income tax return. Generally, you must report REMIC items shown
institution entitled to relief under section 1616(c)(4) of the Small Business
on your Schedule Q (and any attached schedules) or similar statement
Job Protection Act of 1996, Pub. Law No. 104-188, 110 Stat. 1755
consistent with the way the REMIC treated the items on the return it filed.
(August 20, 1996) (the Act). That provision generally allows certain
This rule does not apply if your REMIC falls within the “small REMIC”
financial institutions to continue using the rules of section 860E(a)(2) prior
exception and does not elect to be subject to the consolidated
to its amendment by the Act. (Special rules apply to members of affiliated
entity-level audit procedures.
groups filing consolidated returns and to which section 1616(c)(4) of the
Act applies. See sections 860E(a)(3) and (4) prior to their amendment by
If your treatment on your original or amended return is (or may be)
the Act.) The line 2c amount is treated as “unrelated business taxable
inconsistent with the REMIC’s treatment, or if the REMIC was required to
income” if you are an exempt organization subject to the unrelated
file but has not filed a return, you must file Form 8082, Notice of
business tax under section 511. If you are an individual, enter this
Inconsistent Treatment or Administrative Adjustment Request (AAR), with
amount as an item of information on Schedule E (Form 1040), Part IV,
your original or amended return to identify and explain the inconsistency
column (c). If you must also report this amount as your taxable income
(or to note that a REMIC return has not been filed). See sections 860F(e)
(or AMTI), enter the amount shown on line 2c on the taxable income (or
and 6222 for the inconsistent treatment rules.
AMTI) line of your return and write “Sch. Q” on the dotted line to the left
Errors. If you believe the REMIC has made an error on your Schedule Q,
of the entry space.
notify the REMIC and ask for a corrected Schedule Q. Do not change any
Line 3b—Your share of section 212 expenses for the calendar
items on your copy. Be sure that the REMIC sends a copy of the
quarter. If you are an individual or other pass-through interest holder (as
corrected Schedule Q to the IRS. If you are unable to reach an
defined in Temporary Regulations section 1.67-3T), you must report as
agreement with the REMIC about the inconsistency, you must file Form
ordinary income the total of the amounts shown on line 3b of Schedule Q
8082 as explained in the preceding paragraph.
for each quarter included in your tax year. This amount must be reported
Limitation on losses. Generally, you may not claim your share of the
in addition to your share of taxable income (net loss) determined above. If
quarterly net loss from a REMIC that is greater than the adjusted basis of
you are an individual, report this total on Schedule E (Form 1040), Part IV,
your residual interest in the REMIC at the end of the calendar quarter
column (e). If you are not an individual, report the amounts as instructed
(determined without regard to your share of the net loss of the REMIC for
on your tax return.
that quarter). Any loss disallowed because it exceeds your adjusted basis
If you are an individual and itemize your deductions on your return, you
is treated as incurred by the REMIC in the following quarter, but only for
may be able to deduct the total as a miscellaneous itemized deduction. It
the purpose of offsetting your share of REMIC taxable income for that
should be included with the other miscellaneous deductions that are
quarter.
subject to the 2% of adjusted gross income limit.
Items that increase your basis are:
Fiscal year taxpayers whose tax years do not end
1. Money and your adjusted basis in property contributed to the
with a calendar quarter
REMIC.
2. Your share of the REMIC’s taxable income.
The same rules explained above for calendar year taxpayers apply,
except that you must figure the amount to report from lines 1b, 2c, and
3. Any income reported under section 860F(b)(1)(C)(ii).
3b based on your tax year. For each calendar quarter that overlaps the
Items that decrease your basis are:
beginning or end of your tax year, divide the amount shown on line 1a,
2a, or 3a (whichever is applicable) by the number of days in that quarter.
1. Money and the fair market value of property distributed to you.
Multiply the result by your percentage of ownership of all residual
2. Your share of the REMIC’s losses.
interests for each day of your tax year included in that quarter.
3. Any deduction claimed under section 860F(b)(1)(D)(ii).
Line 1b. Total the daily amounts of taxable income (net loss) for the
overlapping quarters. Add these amounts to the amounts shown on line
Passive activity limitations under section 469. Amounts includible in
1b for the full quarters included in your tax year. Report the resulting
income (or deductible as a loss) by a residual interest holder are treated
income or loss in the same manner as explained above for calendar year
as portfolio income (loss). Such income (or loss) is not taken into account
taxpayers.
in determining the loss from a passive activity under section 469.
Line 2c. Total the daily amounts for the overlapping quarters. Subtract
Excise taxes on excess inclusions of REMIC residual interests. Use
this total from your share of the taxable income for the part of the quarter
Form 8831, Excise Taxes on Excess Inclusions of REMIC Residual
included in your tax year, as previously figured. Add the resulting
Interests, to report and pay (a) the excise tax due under section
amounts for the overlapping quarters to the amounts shown on line 2c
860E(e)(1) if you transferred a residual interest in a REMIC to a
for the full quarters included in your tax year and report it in the same
disqualified organization; (b) the amount due under Regulations section
manner as explained above for calendar year taxpayers.
1.860E-2(a)(7)(ii) if the tax under section 860E(e)(1) is to be waived; or (c)
the excise tax due under section 860E(e)(6) if the residual interest holder
Line 3b. Total the daily amounts of section 212 expenses for the
is a pass-through entity with interests held by a disqualified organization.
overlapping quarters. Add these amounts to the amounts shown on line
See Form 8831 for more details and for definitions of “disqualified
3b for the full quarters included in your tax year. Report the resulting
organization” and “pass-through entity.”
amount in the same manner as explained above for calendar year
taxpayers.
Specific Instructions
Item C—REMIC assets. This information is provided only for the use of
a residual interest holder such as a real estate investment trust or
domestic building and loan association that needs to know the
composition of the REMIC’s underlying assets.
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