Instructions For Form 1066 - 2016 (Page 6 of 9) in pdf

Any contribution to facilitate a

“Small REMICs,” as defined in

Line 1d—Gain from the disposition

clean-up call or a qualified liquidation.

sections 860F(e), 6231(a)(1)(B), and

of cash flow investments (except

Any payment in the nature of a

the regulations of both, aren't subject to

from a qualified liquidation). Enter

guarantee.

the rules for consolidated REMIC

the amount of gain from the disposition

Any contribution during the 3-month

proceedings, but may make an election

of any cash flow investment except from

period beginning on the startup day.

to be covered by them. This election

a qualified liquidation. A “cash flow

Any contribution to a qualified reserve

can be revoked only with the consent of

investment” is any investment of

fund by any holder of a residual interest

the Commissioner.

amounts received under qualified

in the REMIC.

mortgages for a temporary period (not

Item H—Foreign financial accounts.

more than 13 months) before

Attach a statement showing your

Check the “Yes” box if either 1 or 2

distribution to holders of interests in the

computation.

below applies to the REMIC. Otherwise,

REMIC. See section 860F(a)(4) for the

check the “No” box.

Designation of Tax Matters

definition of a qualified liquidation.

1. At any time during the 2016

Person (TMP)

calendar year, the REMIC had a

A REMIC may designate a TMP in the

Part II—Tax on Net Income From

financial interest in or signature or other

same manner that a partnership may

Foreclosure Property

authority over any foreign financial

designate a tax matters partner under

account, including bank, securities, or

For a definition of foreclosure property,

Regulations section 301.6231(a)(7)-1.

other types of financial accounts in a

see the instructions for Schedule L,

When applying that section, treat all

foreign country (see FinCEN Form 114,

line 1c, later. Net income from

holders of a residual interest in the

Report of Foreign Bank and Financial

foreclosure property must also be

REMIC as general partners. The

Accounts (FBAR)); and

included in the computation of taxable

designation may be made by

a. The combined value of the

income (or net loss) shown on Form

completing the Designation of Tax

accounts was more than $10,000 at any

1066, page 1, Section I.

Matters Person section on Form 1066,

time during the calendar year and

page 3.

Line 6—Gross income from foreclo-

b. The account wasn't with a U.S.

sure property. Don't include on line 6

Additional Information

military banking facility operated by a

amounts described in section 856(c)(3)

Be sure to answer the questions and

U.S. financial institution.

(A), (B), (C), (D), (E), or (G).

provide other information in items E

2. The REMIC owns more than 50%

Line 8—Deductions. Only those

through L.

of the stock in any corporation that

expenses that are directly connected

would answer “Yes” to item 1 above.

Item E—Type of entity. Check the box

with the production of the income shown

for the entity type of the REMIC

on line 7 may be deducted to figure net

If the “Yes” box is checked:

recognized under state or local law. If

income from foreclosure property.

Enter the name of the foreign country

the REMIC isn't a separate entity under

Allowable deductions include

or countries where the foreign

state or local law, check the box for

depreciation on foreclosure property,

account(s) is held. Attach a separate

“Segregated Pool of Assets,” and state

interest accrued on debt of the REMIC

sheet if more space is needed.

the name and type of entity that owns

attributable to the carrying of foreclosure

Electronically file FinCEN Form 114,

the assets in the spaces provided.

property, real estate taxes, and fees

also referred to as FBAR, with the

charged by an independent contractor

Item F—Number of residual interest

Department of the Treasury using the

to manage foreclosure property. Don't

holders. Enter the number of persons

FinCEN's BSA E-Filing System.

deduct general overhead and

who were residual interest holders at

Because FinCEN Form 114 isn't a tax

administrative expenses.

any time during the tax year.

form, don't file it with Form 1066.

Line 10—Tax on net income from

Item G—Consolidated REMIC pro-

See

for more

foreclosure property. The REMIC is

ceedings. Generally, the tax treatment

information.

allowed a deduction for the amount of

of REMIC items is determined at the

Item I—Foreign trust. The REMIC

tax shown on this line. Include this

REMIC level in a consolidated REMIC

may be required to file Form 3520,

amount in computing the deduction for

proceeding, rather than in separate

Annual Return To Report Transactions

taxes entered on Form 1066, page 1,

proceedings with individual residual

With Foreign Trusts and Receipt of

Section I, line 11.

interest holders.

Certain Foreign Gifts, if:

Check the box for item G if any of the

It directly or indirectly transferred

Part III—Tax on Contributions

following apply.

money or property to a foreign trust (for

The REMIC had more than 10

After the Startup Day

this purpose, any U.S. person who

residual interest holders at any time

created a foreign trust is considered a

Don't complete this part if the startup

during the tax year (spouses count as

transferor);

day was before July 1, 1987. For this

one holder).

It is treated as the owner of any part

purpose, startup day means any day

Any residual interest holder was a

of the assets of a foreign trust under the

selected by a REMIC that is on or

nonresident alien, or was other than an

grantor trust rules; or

before the first day on which interests in

individual, a C corporation, or an estate,

It received a distribution from a

the REMIC are issued.

unless there was at no time during the

foreign trust.

Line 11—Tax. Enter the amount of

tax year more than one holder of the

For more information, see the

contributions received during the

residual interest.

Instructions for Form 3520.

calendar year after the startup day (as

The REMIC has elected to be subject

defined in the prior paragraph). See

to the rules for consolidated REMIC

Note. An owner of a foreign trust must

section 860G(d). Don't include cash

proceedings.

ensure that the trust files an annual

contributions described next.

-6-

Instructions For Form 1066 - 2016 Page 6

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