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. 12-2013)
Page
Instructions for Residual Interest Holder
Specific Instructions
Section references are to the Internal Revenue Code unless otherwise noted.
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
Future Developments
building and loan association that needs to know the composition of the
REMIC’s underlying assets.
For the latest information about developments related to Schedule Q and its
instructions, such as legislation enacted after they were published, go to
Calendar Year Taxpayers and Fiscal Year Taxpayers
Whose Tax Years End With a Calendar Quarter
Purpose of Schedule
Line 1b—Your share of the taxable income (net loss) for the calendar
quarter. If you are an individual, you must report, as ordinary income or loss,
The real estate mortgage investment conduit (REMIC) uses Schedule Q to
the total of the amounts shown on line 1b of Schedule Q for each quarter
notify you of your share of the REMIC’s quarterly taxable income (or net
included in your tax year, after applying any basis limitations, on Schedule E
loss), the excess inclusion with respect to your interest, and your share of the
(Form 1040), Part IV, column (d). If you are not an individual, report the
REMIC’s section 212 expenses for the quarter.
amounts as instructed on your tax return.
Keep your copy of this schedule for your records. Do not file it with your
Line 2c—Excess inclusion for the calendar quarter for your residual
tax return.
interest. The total of the amounts shown on line 2c for all quarters included
Tax treatment of REMIC items. The REMIC is not subject to income tax
in your tax year is the smallest amount you may report for that year as your:
(except on net income from prohibited transactions, net income from
• Taxable income or
foreclosure property, and contributions made after the startup day).
However, you are liable for tax on your share of the REMIC’s taxable income,
• Alternative minimum taxable income (AMTI).
whether or not distributed, and you must include your share on your income
Except where necessary or appropriate to prevent avoidance of federal
tax return. Generally, you must report REMIC items shown on your Schedule
income tax the preceding sentence does not apply to a financial institution
Q (and any attached schedules) or similar statement consistent with the way
entitled to relief under section 1616(c)(4) of the Small Business Job
the REMIC treated the items on the return it filed. This rule does not apply if
Protection Act of 1996, Pub. Law No. 104-188, 110 Stat. 1755 (August 20,
your REMIC falls within the “small REMIC” exception and does not elect to
1996) (the Act). That provision generally allows certain financial institutions to
be subject to the consolidated entity-level audit procedures.
continue using the rules of section 860E(a)(2) prior to its amendment by the
If your treatment on your original or amended return is (or may be)
Act. (Special rules apply to members of affiliated groups filing consolidated
inconsistent with the REMIC’s treatment, or if the REMIC was required to file
returns and to which section 1616(c)(4) of the Act applies. See sections
but has not filed a return, you must file Form 8082, Notice of Inconsistent
860E(a)(3) and (4) prior to their amendment by the Act.) The line 2c amount is
Treatment or Administrative Adjustment Request (AAR), with your original or
treated as “unrelated business taxable income” if you are an exempt
amended return to identify and explain the inconsistency (or to note that a
organization subject to the unrelated business tax under section 511. If you
REMIC return has not been filed). See sections 860F(e) and 6222 for the
are an individual, enter this amount as an item of information on Schedule E
inconsistent treatment rules.
(Form 1040), Part IV, column (c). If you must also report this amount as your
taxable income (or AMTI), enter the amount shown on line 2c on the taxable
Errors. If you believe the REMIC has made an error on your Schedule Q,
income (or AMTI) line of your return and write “Sch. Q” on the dotted line to
notify the REMIC and ask for a corrected Schedule Q. Do not change any
the left of the entry space.
items on your copy. Be sure that the REMIC sends a copy of the corrected
Schedule Q to the IRS. If you are unable to reach an agreement with the
Line 3b—Your share of section 212 expenses for the calendar quarter. If
REMIC about the inconsistency, you must file Form 8082 as explained in the
you are an individual or other pass-through interest holder (as defined in
preceding paragraph.
Temporary Regulations section 1.67-3T), you must report as ordinary income
the total of the amounts shown on line 3b of Schedule Q for each quarter
Limitation on losses. Generally, you may not claim your share of the
included in your tax year. This amount must be reported in addition to your
quarterly net loss from a REMIC that is greater than the adjusted basis of
share of taxable income (net loss) determined above. If you are an individual,
your residual interest in the REMIC at the end of the calendar quarter
report this total on Schedule E (Form 1040), Part IV, column (e). If you are not
(determined without regard to your share of the net loss of the REMIC for
an individual, report the amounts as instructed on your tax return.
that quarter). Any loss disallowed because it exceeds your adjusted basis is
treated as incurred by the REMIC in the following quarter, but only for the
If you are an individual and itemize your deductions on your return, you
purpose of offsetting your share of REMIC taxable income for that quarter.
may be able to deduct the total as a miscellaneous itemized deduction. It
should be included with the other miscellaneous deductions that are subject
Items that increase your basis are:
to the 2% of adjusted gross income limit.
1. Money and your adjusted basis in property contributed to the REMIC.
Fiscal Year Taxpayers Whose Tax Years Do Not End
2. Your share of the REMIC’s taxable income.
With a Calendar Quarter
3. Any income reported under section 860F(b)(1)(C)(ii).
Items that decrease your basis are:
The same rules explained above for calendar year taxpayers apply, except
that you must figure the amount to report from lines 1b, 2c, and 3b based on
1. Money and the fair market value of property distributed to you.
your tax year. For each calendar quarter that overlaps the beginning or end
2. Your share of the REMIC’s losses.
of your tax year, divide the amount shown on line 1a, 2a, or 3a (whichever is
3. Any deduction claimed under section 860F(b)(1)(D)(ii).
applicable) by the number of days in that quarter. Multiply the result by your
percentage of ownership of all residual interests for each day of your tax year
Passive activity limitations under section 469. Amounts includible in
included in that quarter.
income (or deductible as a loss) by a residual interest holder are treated as
portfolio income (loss). Such income (or loss) is not taken into account in
Line 1b. Total the daily amounts of taxable income (net loss) for the
determining the loss from a passive activity under section 469.
overlapping quarters. Add these amounts to the amounts shown on line 1b
for the full quarters included in your tax year. Report the resulting income or
Excise taxes on excess inclusions of REMIC residual interests. Use Form
loss in the same manner as explained above for calendar year taxpayers.
8831, Excise Taxes on Excess Inclusions of REMIC Residual Interests, to
report and pay (a) the excise tax due under section 860E(e)(1) if you
Line 2c. Total the daily amounts for the overlapping quarters. Subtract this
transferred a residual interest in a REMIC to a disqualified organization; (b)
total from your share of the taxable income for the part of the quarter
the amount due under Regulations section 1.860E-2(a)(7)(ii) if the tax under
included in your tax year, as previously figured. Add the resulting amounts
section 860E(e)(1) is to be waived; or (c) the excise tax due under section
for the overlapping quarters to the amounts shown on line 2c for the full
860E(e)(6) if the residual interest holder is a pass-through entity with interests
quarters included in your tax year and report it in the same manner as
held by a disqualified organization. See Form 8831 for more details and for
explained above for calendar year taxpayers.
definitions of “disqualified organization” and “pass-through entity.”
Line 3b. Total the daily amounts of section 212 expenses for the overlapping
quarters. Add these amounts to the amounts shown on line 3b for the full
quarters included in your tax year. Report the resulting amount in the same
manner as explained above for calendar year taxpayers.
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