§860G. Other definitions and special rules — Inbound Citations
26 U.S.C. § 860G
Cited by 95 provisions in release 119-102.
Citations to §860G(a)(1)
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(a) In determining the tax under this chapter of any holder of a regular interest in a REMIC, such interest (if not otherwise a debt instrument) shall be treated as a debt instrument.
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(b) The amounts includible in gross income with respect to any regular interest in a REMIC shall be determined under the accrual method of accounting.
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(c) Gain on the disposition of a regular interest shall be treated as ordinary income to the extent such gain does not exceed the excess (if any) of—(1) the amount which would have been includible in the gross income of the taxpayer with respect to such interest if the yield on such interest were 110 percent of the applicable Federal rate (as defined in section 1274(d) without regard to paragraph (2) thereof) as of the beginning of the taxpayer’s holding period, over
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(d) For special rules in determining inclusion of original issue discount on regular interests, see section 1272(a)(6).
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(A) regular interests in such REMIC (if not otherwise debt instruments) shall be treated as indebtedness of such REMIC,
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(2) all of the interests in which are regular interests or residual interests,
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(A) required to prevent default on a regular interest where the threatened default resulted from a default on 1 or more qualified mortgages, or
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(i) in the case of a regular interest, such excess shall be included in gross income (as determined under rules similar to rules of section 1276(b)), and
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(i) in the case of a regular interest, such excess shall be allowable as a deduction under rules similar to the rules of section 171, and
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(i) any regular interest in a REMIC or qualified mortgage held by a REMIC,
Citations to §860G(a)(1)(B)(i)
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(ii) the interest payments (or other similar amounts) with respect to such position meet the requirements of clause (i) of section 860G(a)(1)(B), and
Citations to §860G(a)(2)
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(M) section 860E(e) (relating to taxes with respect to certain residual interests),
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(1) For purposes of this subtitle, in the case of a financial institution referred to in paragraph (2), the sale or exchange of a bond, debenture, note, or certificate or other evidence of indebtedness shall not be considered a sale or exchange of a capital asset. For purposes of the preceding sentence, any regular or residual interest in a REMIC shall be treated as an evidence of indebtedness.
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(4) A regular or residual interest in a REMIC shall be treated as a qualifying real property loan; except that, if less than 95 percent of the assets of such REMIC are qualifying real property loans (determined as if the taxpayer held the assets of the REMIC), such interest shall be so treated only in the proportion which the assets of such REMIC consist of such loans. For purposes of determining whether any interest in a REMIC qualifies under the preceding sentence, any interest in another REMIC held by such REMIC shall be treated as a qualifying real property loan under principles similar to the principles of the preceding sentence, except that if such REMIC’s are part of a tiered structure, they shall be treated as 1 REMIC for purposes of this paragraph.
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(E) A regular or residual interest in a REMIC shall be treated as a real estate asset, and any amount includible in gross income with respect to such an interest shall be treated as interest on an obligation secured by a mortgage on real property; except that, if less than 95 percent of the assets of such REMIC are real estate assets (determined as if the real estate investment trust held such assets), such real estate investment trust shall be treated as holding directly (and as receiving directly) its proportionate share of the assets and income of the REMIC. For purposes of determining whether any interest in a REMIC qualifies under the preceding sentence, any interest held by such REMIC in another REMIC shall be treated as a real estate asset under principles similar to the principles of the preceding sentence, except that, if such REMIC’s are part of a tiered structure, they shall be treated as one REMIC for purposes of this subparagraph.
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(1) In determining the tax under this chapter of any holder of a residual interest in a REMIC, such holder shall take into account his daily portion of the taxable income or net loss of such REMIC for each day during the taxable year on which such holder held such interest.
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(B) by allocating the amount so allocated to any day among the holders (on such day) of residual interests in proportion to their respective holdings on such day.
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(1) The basis of any person’s residual interest in a REMIC shall be increased by the amount of the taxable income of such REMIC taken into account under subsection (a) by such person with respect to such interest.
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(2) The basis of any person’s residual interest in a REMIC shall be decreased (but not below zero) by the sum of the following amounts:(A) any distributions to such person with respect to such interest, and(B) any net loss of such REMIC taken into account under subsection (a) by such person with respect to such interest.
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(1) Any amount taken into account under subsection (a) by any holder of a residual interest in a REMIC shall be treated as ordinary income or ordinary loss, as the case may be.
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(A) The amount of the net loss of any REMIC taken into account by a holder under subsection (a) with respect to any calendar quarter shall not exceed the adjusted basis of such holder’s residual interest in such REMIC as of the close of such calendar quarter (determined without regard to the adjustment under subsection (d)(2)(B) for such calendar quarter).
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(2) all of the interests in which are regular interests or residual interests,
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(3) which has 1 (and only 1) class of residual interests (and all distributions, if any, with respect to such interests are pro rata),
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(A) residual interests in such entity are not held by disqualified organizations (as defined in section 860E(e)(5)), and
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(1) 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.
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(B) the alternative minimum 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, and
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(b) 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.
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(1) The term “excess inclusion” means, with respect to any residual interest in a REMIC for any calendar quarter, the excess (if any) of—(A) the amount taken into account with respect to such interest by the holder under section 860C(a), over(B) the sum of the daily accruals with respect to such interest for days during such calendar quarter while held by such holder.To the extent provided in regulations, if residual interests in a REMIC do not have significant value, the excess inclusions with respect to such interests shall be the amount determined under subparagraph (A) without regard to subparagraph (B).
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(A) For purposes of this subsection, the daily accrual with respect to any residual interest for any day in any calendar quarter shall be determined by allocating to each day in such quarter its ratable portion of the product of—(i) the adjusted issue price of such interest at the beginning of such quarter, and
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(B) For purposes of this paragraph, the adjusted issue price of any residual interest at the beginning of any calendar quarter is the issue price of the residual interest (adjusted for contributions)—(i) increased by the amount of daily accruals for prior quarters, and
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(C) For purposes of this paragraph, the term “Federal long-term rate” means the Federal long-term rate which would have applied to the residual interest under section 1274(d) (determined without regard to paragraph (2) thereof) if it were a debt instrument.
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(d) If a residual interest in a REMIC is held by a real estate investment trust, under regulations prescribed by the Secretary—(1) any excess of—(A) the aggregate excess inclusions determined with respect to such interests, over(B) the real estate investment trust taxable income (within the meaning of section 857(b)(2), excluding any net capital gain),shall be allocated among the shareholders of such trust in proportion to the dividends received by such shareholders from such trust, and(2) any amount allocated to a shareholder under paragraph (1) shall be treated as an excess inclusion with respect to a residual interest held by such shareholder.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.
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(2) any amount allocated to a shareholder under paragraph (1) shall be treated as an excess inclusion with respect to a residual interest held by such shareholder.
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(1) A tax is hereby imposed on any transfer of a residual interest in a REMIC to a disqualified organization.
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(2) The amount of the tax imposed by paragraph (1) on any transfer of a residual interest shall be equal to the product of—(A) the amount (determined under regulations) equal to the present value of the total anticipated excess inclusions with respect to such interest for periods after such transfer, multiplied by(B) the highest rate of tax specified in section 11(b).
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(C) 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.
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(iii) all proceeds of the liquidation (plus the cash), less assets retained to meet claims, are credited or distributed to holders of regular or residual interests on or before the last day of the liquidation period.
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(A) No gain or loss shall be recognized to the transferor on the transfer of any property to a REMIC in exchange for regular or residual interests in such REMIC.
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(B) The adjusted bases of the regular and residual interests received in a transfer described in subparagraph (A) shall be equal to the aggregate adjusted bases of the property transferred in such transfer. Such amount shall be allocated among such interests in proportion to their respective fair market values.
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(C) If the issue price of any regular or residual interest exceeds its adjusted basis as determined under subparagraph (B), for periods during which such interest is held by the transferor (or by any other person whose basis is determined in whole or in part by reference to the basis of such interest in the hand of the transferor)—(i) in the case of a regular interest, such excess shall be included in gross income (as determined under rules similar to rules of section 1276(b)), and(ii) in the case of a residual interest, such excess shall be included in gross income ratably over the anticipated period during which the REMIC will be in existence.
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(ii) in the case of a residual interest, such excess shall be included in gross income ratably over the anticipated period during which the REMIC will be in existence.
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(D) If the adjusted basis of any regular or residual interest received in a transfer described in subparagraph (A) exceeds its issue price, for periods during which such interest is held by the transferor (or by any other person whose basis is determined in whole or in part by reference to the basis of such interest in the hand of the transferor)—(i) in the case of a regular interest, such excess shall be allowable as a deduction under rules similar to the rules of section 171, and(ii) in the case of a residual interest, such excess shall be allowable as a deduction ratably over the anticipated period during which the REMIC will be in existence.
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(ii) in the case of a residual interest, such excess shall be allowable as a deduction ratably over the anticipated period during which the REMIC will be in existence.
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(c) If a REMIC makes a distribution of property with respect to any regular or residual interest—
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(1) any residual interest in a REMIC shall be treated as a security, and
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(2) in applying such section to any loss claimed to have been sustained on the sale or other disposition of a residual interest in a REMIC—(A) except as provided in regulations, any residual interest in any REMIC and any interest in a taxable mortgage pool (as defined in section 7701(i)) comparable to a residual interest in a REMIC shall be treated as substantially identical stock or securities, and
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(A) except as provided in regulations, any residual interest in any REMIC and any interest in a taxable mortgage pool (as defined in section 7701(i)) comparable to a residual interest in a REMIC shall be treated as substantially identical stock or securities, and
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(e) For purposes of subtitle F, a REMIC shall be treated as a partnership (and holders of residual interests in such REMIC shall be treated as partners). Any return required by reason of the preceding sentence shall include the amount of the daily accruals determined under section 860E(c). Such return shall be filed by the REMIC. The determination of who may sign such return shall be made without regard to the first sentence of this subsection.
Citations to §860G(a)(3)
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(A) is issued under a qualified mortgage credit certificate program by the State or political subdivision having the authority to issue a qualified mortgage bond to provide financing on the principal residence of the taxpayer,
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(A) The term “qualified mortgage credit certificate program” means any program—(i) which is established by a State or political subdivision thereof for any calendar year for which it is authorized to issue qualified mortgage bonds,(ii) under which the issuing authority elects (in such manner and form as the Secretary may prescribe) not to issue an amount of private activity bonds which it may otherwise issue during such calendar year under section 146,(iii) under which the indebtedness certified by mortgage credit certificates meets the requirements of the following subsections of section 143 (as modified by subparagraph (B) of this paragraph):(I) subsection (c) (relating to residence requirements),(II) subsection (d) (relating to 3-year requirement),(III) subsection (e) (relating to purchase price requirement),(IV) subsection (f) (relating to income requirements),(V) subsection (h) (relating to portion of loans required to be placed in targeted areas), and(VI) paragraph (1) of subsection (i) (relating to other requirements),(iv) under which no mortgage credit certificate may be issued with respect to any residence any of the financing of which is provided from the proceeds of a qualified mortgage bond or a qualified veterans’ mortgage bond,(v) except to the extent provided in regulations, which is not limited to indebtedness incurred from particular lenders,(vi) except to the extent provided in regulations, which provides that a mortgage credit certificate is not transferrable, and(vii) if the issuing authority allocates a block of mortgage credit certificates for use in connection with a particular development, which requires the developer to furnish to the issuing authority and the homebuyer a certificate that the price for the residence is no higher than it would be without the use of a mortgage credit certificate.
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(i) which is established by a State or political subdivision thereof for any calendar year for which it is authorized to issue qualified mortgage bonds,
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(iv) under which no mortgage credit certificate may be issued with respect to any residence any of the financing of which is provided from the proceeds of a qualified mortgage bond or a qualified veterans’ mortgage bond,
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(i) each qualified mortgage certificate credit program shall be treated as a separate issue,
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(A) In the case of each qualified mortgage credit certificate program, the sum of the products determined by multiplying—(i) the certified indebtedness amount of each mortgage credit certificate issued under such program, by(ii) the certificate credit rate with respect to such certificate,shall not exceed 25 percent of the nonissued bond amount.
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(B) For purposes of subparagraph (A), the term “nonissued bond amount” means, with respect to any qualified mortgage credit certificate program, the amount of qualified mortgage bonds which the issuing authority is otherwise authorized to issue and elects not to issue under subsection (c)(2)(A)(ii).
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(5) At least 90 days before any mortgage credit certificate is to be issued after a qualified mortgage credit certificate program, the issuing authority shall provide reasonable public notice of—(A) the eligibility requirements for such certificate,(B) the methods by which such certificates are to be issued, and(C) such other information as the Secretary may require.
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(9) The term “qualified mortgage bond” has the meaning given such term by section 143(a)(1).
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(II) a qualified mortgage bond (as defined in section 143(a)), or
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(B) a qualified mortgage bond,
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(1) For purposes of this title, the term “qualified mortgage bond” means a bond which is issued as part of a qualified mortgage issue.
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(A) For purposes of this title, the term “qualified mortgage issue” means an issue by a State or political subdivision thereof of 1 or more bonds, but only if—(i) all proceeds of such issue (exclusive of issuance costs and a reasonably required reserve) are to be used to finance owner-occupied residences,(ii) such issue meets the requirements of subsections (c), (d), (e), (f), (g), (h), (i), and (m)(7),(iii) such issue does not meet the private business tests of paragraphs (1) and (2) of section 141(b), and(iv) except as provided in subparagraph (D)(ii), repayments of principal on financing provided by the issue are used not later than the close of the 1st semiannual period beginning after the date the prepayment (or complete repayment) is received to redeem bonds which are part of such issue.Clause (iv) shall not apply to amounts received within 10 years after the date of issuance of the issue (or, in the case of refunding bond, the date of issuance of the original bond).
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(II) the excess of the amounts received from any person other than the mortgagor by any person in connection with the acquisition of the mortgagor’s interest in the property over the usual and reasonable acquisition costs of a person acquiring like property where owner-financing is not provided through the use of qualified mortgage bonds or qualified veterans’ mortgage bonds.
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(II) any application fee, survey fee, credit report fee, insurance charge, or similar amount to the extent such amount does not exceed amounts charged in such area in cases where owner-financing is not provided through the use of qualified mortgage bonds or qualified veterans’ mortgage bonds.
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(A) Notwithstanding the requirements of subsection (i)(1), the proceeds of a qualified mortgage issue may be used to refinance a mortgage on a residence which was originally financed by the mortgagor through a qualified subprime loan.
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(i) financing for the indebtedness was provided in whole or part from the proceeds of any tax-exempt qualified mortgage bond, or
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(II) a qualified mortgage issue (determined by substituting “12-month period” for “42-month period” each place it appears in section 143(a)(2)(D)(i)).
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(B) the purpose of issuing qualified mortgage bonds or mortgage credit certificates,
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(3) In the case of any qualified mortgage bond, paragraph (1) shall apply only if the maturity date of the refunding bond is not later than the later of—(A) the average maturity date of the qualified mortgage bonds to be refunded by the issue of which the refunding bond is a part, or
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(A) the average maturity date of the qualified mortgage bonds to be refunded by the issue of which the refunding bond is a part, or
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(1) the amount of qualified mortgage bonds which such authority elects not to issue under section 25(c)(2)(A)(ii) during such year, plus
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(2) In the case of an issue of qualified mortgage bonds or qualified veterans’ mortgage bonds, paragraph (1) shall be applied by substituting “3.5 percent” for “2 percent” if the proceeds of the issue do not exceed $20,000,000.
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(D) This paragraph shall not apply to any qualified mortgage bond or qualified veterans’ mortgage bond.
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(II) a qualified mortgage bond, or
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(A) In the case of any residence with respect to which financing is provided from the proceeds of a tax-exempt qualified mortgage bond or qualified veterans’ mortgage bond, if there is a continuous period of at least 1 year during which such residence is not the principal residence of at least 1 of the mortgagors who received such financing, then no deduction shall be allowed under this chapter for interest on such financing which accrues on or after the date such period began and before the date such residence is again the principal residence of at least 1 of the mortgagors who received such financing.
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(i) Premiums paid or accrued for qualified mortgage insurance by a taxpayer during the taxable year in connection with acquisition indebtedness with respect to a qualified residence of the taxpayer shall be treated for purposes of this section as interest which is qualified residence interest.
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(E) The term “qualified mortgage insurance” means—(i) mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, or the Rural Housing Service, and(ii) private mortgage insurance (as defined by section 2 of the Homeowners Protection Act of 1998 (12 U.S.C. 4901), as in effect on the date of the enactment of this subparagraph).
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(F) Any amount paid by the taxpayer for qualified mortgage insurance that is properly allocable to any mortgage the payment of which extends to periods that are after the close of the taxable year in which such amount is paid shall be chargeable to capital account and shall be treated as paid in such periods to which so allocated. No deduction shall be allowed for the unamortized balance of such account if such mortgage is satisfied before the end of its term. The preceding sentences shall not apply to amounts paid for qualified mortgage insurance provided by the Department of Veterans Affairs or the Rural Housing Service.
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(4) as of the close of the 3rd month beginning after the startup day and at all times thereafter, substantially all of the assets of which consist of qualified mortgages and permitted investments,
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(A) The disposition of any qualified mortgage transferred to the REMIC other than a disposition pursuant to—(i) the substitution of a qualified replacement mortgage for a qualified mortgage (or the repurchase in lieu of substitution of a defective obligation),(ii) a disposition incident to the foreclosure, default, or imminent default of the mortgage,(iii) the bankruptcy or insolvency of the REMIC, or(iv) a qualified liquidation.
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(i) the substitution of a qualified replacement mortgage for a qualified mortgage (or the repurchase in lieu of substitution of a defective obligation),
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(B) The receipt of any income attributable to any asset which is neither a qualified mortgage nor a permitted investment.
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(A) required to prevent default on a regular interest where the threatened default resulted from a default on 1 or more qualified mortgages, or
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(i) any regular interest in a REMIC or qualified mortgage held by a REMIC,
Citations to §860G(a)(4)
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(i) the substitution of a qualified replacement mortgage for a qualified mortgage (or the repurchase in lieu of substitution of a defective obligation),
Citations to §860G(a)(5)
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(4) as of the close of the 3rd month beginning after the startup day and at all times thereafter, substantially all of the assets of which consist of qualified mortgages and permitted investments,
Citations to §860G(a)(6)
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(D) Gain from the disposition of any cash flow investment other than pursuant to any qualified liquidation.
Citations to §860G(a)(9)
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(4) as of the close of the 3rd month beginning after the startup day and at all times thereafter, substantially all of the assets of which consist of qualified mortgages and permitted investments,
Citations to §860G(c)
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(E) the amount of the net income from foreclosure property (if any) shall be reduced by the amount of the tax imposed by section 860G(c).
Citations to §860G(c)(2)
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(ii) 90 percent of the excess of the net income from foreclosure property over the tax imposed on such income by subsection (b)(4)(A); minus
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(D) There shall be excluded an amount equal to the net income from foreclosure property.
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(A) A tax is hereby imposed for each taxable year on the net income from foreclosure property of every real estate investment trust. Such tax shall be computed by multiplying the net income from foreclosure property by the highest rate of tax specified in section 11(b).
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(B) For purposes of this part, the term “net income from foreclosure property” means the excess of—(i) gain (including any foreign currency gain, as defined in section 988(b)(1)) from the sale or other disposition of foreclosure property described in section 1221(a)(1) and the gross income for the taxable year derived from foreclosure property (as defined in section 856(e)), but only to the extent such gross income is not described in (or, in the case of foreign currency gain, not attributable to gross income described in) section 856(c)(3) other than subparagraph (F) thereof, over(ii) the deductions allowed by this chapter which are directly connected with the production of the income referred to in clause (i).
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(ii) the excess of the net income from foreclosure property (as defined in section 857(b)(4)(B)) over the tax on such income imposed by section 857(b)(4)(A),
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(E) the amount of the net income from foreclosure property (if any) shall be reduced by the amount of the tax imposed by section 860G(c).