Description
(1) Description. A residual interest in a REMIC is described in this paragraph (c)(1) if, on the date the taxpayer acquires the residual interest, the present value of the anticipated tax liabilities associated with holding the interest exceeds the sum of (i) The present value of the expected future distributions on the interest; and (ii) The present value of the anticipated tax savings associated with holding the interest as the REMIC generates losses. (2) Special rules applicable to negative value REMIC residuals acquired before January 4, 1995. Solely for purposes of this paragraph (c) (i) If a transferee taxpayer acquires a residual interest with a basis determined by reference to the transferor's basis, then the transferee is deemed to acquire the interest on the date the transferor acquired it (or is deemed to acquire it under this paragraph (c)(2)(i)). (ii) Anticipated tax liabilities, expected future distributions, and anticipated tax savings are determined under the rules in 1.860E-2(a)(3) and without regard to the operation of section 475. (iii) Present values are determined under the rules in 1.860E-2(a)(4).