26 U.S. Code § 860E - Treatment of income in excess of daily accruals on residual interests
The taxable income of any holder of a residual interest in a REMIC for any taxable year shall in no event be less than the excess inclusion for such taxable year.
All members of an affiliated group filing a consolidated return shall be treated as 1 taxpayer for purposes of this subsection.
If the holder of any residual interest in a REMIC is an organization subject to the tax imposed by section 511, the excess inclusion of such holder for any taxable year shall be treated as unrelated business taxable income of such holder for purposes of section 511.
A tax is hereby imposed on any transfer of a residual interest in a REMIC to a disqualified organization.
The tax imposed by paragraph (1) on any transfer shall be paid by the transferor; except that, where such transfer is through an agent for a disqualified organization, such tax shall be paid by such agent.
Any tax imposed by this paragraph with respect to any excess inclusion of any pass-thru entity for any taxable year shall, for purposes of this title (other than this subsection), be applied against (and operate to reduce) the amount included in gross income with respect to the residual interest involved.
Except as provided in regulations, with respect to any variable contract (as defined in section 817), there shall be no adjustment in the reserve to the extent of any excess inclusion.
1996—Subsec. (a)(1). Pub. L. 104–188, § 1616(b)(10)(A), substituted “The” for “Except as provided in paragraph (2), the”.
Subsec. (a)(2). Pub. L. 104–188, § 1616(b)(10)(B), (C), redesignated par. (3) as (2), struck out “, except that paragraph (2) shall be applied separately with respect to each corporation which is a member of such group and to which section 593 applies” after “of this subsection”, and struck out former par. (2) which read as follows: “Exception for certain financial institutions.—Paragraph (1) shall not apply to any organization to which section 593 applies. The Secretary may by regulations provide that the preceding sentence shall not apply where necessary or appropriate to prevent avoidance of tax imposed by this chapter.”
Subsec. (a)(3). Pub. L. 104–188, § 1616(b)(10)(B), redesignated par. (5) as (3). Former par. (3) redesignated (2).
Subsec. (a)(4). Pub. L. 104–188, § 1616(b)(10)(B), (D), redesignated par. (6) as (4), struck out at end “The preceding sentence shall not apply to any organization to which section 593 applies, except to the extent provided in regulations prescribed by the Secretary under paragraph (2).”, and struck out former par. (4) which related to certain subsidiaries being treated as single corporations to which section 593 applied.
Subsec. (a)(5). Pub. L. 104–188, § 1616(b)(10)(B), redesignated par. (5) as (3).
Subsec. (a)(6). Pub. L. 104–188, § 1616(b)(10)(B), redesignated par. (6) as (4).
Pub. L. 104–188, § 1704(h)(1), added par. (6).
1988—Subsec. (a)(3), (4). Pub. L. 100–647, § 1006(t)(15), added pars. (3) and (4).
Subsec. (a)(5). Pub. L. 100–647, § 1006(t)(27), added par. (5).
Subsec. (c)(2)(B). Pub. L. 100–647, § 1006(t)(13), (17), substituted “issue price of the residual interest (adjusted for contributions)” for “issue price of residual interest” in introductory text, and in cl. (ii) inserted “(but not below zero)” after “decreased”.
Subsec. (d). Pub. L. 100–647, § 1006(t)(23), inserted at end “Rules similar to the rules of the preceding sentence shall apply also in the case of regulated investment companies, common trust funds, and organizations to which part I of subchapter T applies.”
Subsec. (e). Pub. L. 100–647, § 1006(t)(16)(B), added subsec. (e).
Subsec. (f). Pub. L. 100–647, § 1006(t)(26), added subsec. (f).
Amendment by section 1616(b)(10) of Pub. L. 104–188 applicable to taxable years beginning after Dec. 31, 1995, but not applicable to any residual interest held by a taxpayer if such interest has been held by such taxpayer at all times since Oct. 31, 1995, see section 1616(c)(1), (4) of Pub. L. 104–188, set out as a note under section 593 of this title.
Amendment by section 1006(t)(13), (15), (17), (23), (26), (27) of Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.
Written determinations for this section
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