December 4, 1991
TO: TAX MEMBERS NO. 59-91
ACCOUNTING/TREASURERS MEMBERS NO. 33-91
RE: FINAL AND TEMPORARY REMIC INFORMATION REPORTING REGULATIONS
__________________________________________________________
The Internal Revenue Service has issued the attached three
sets of regulations (one final and two proposed sets of
regulations) on the information reporting and other requirements
related to real estate mortgage investment conduits ("REMICs")
and other issuers of collateralized debt obligations. Among the
provisions of the regulations are some which would be of interest
to regulated investment companies ("RICs") which may own regular
or residual interests in REMICs or interests in collateralized
debt obligations.
The first set of regulations finalizes earlier proposed
regulations. Under the final regulations, REMICs must provide
residual interest holders with certain information at the close
of each calendar quarter, including (1) the residual interest
holder's share of REMIC income or loss during the quarter, (2)
the amount of excess inclusion, and (3) if the residual interest
holder is, among other entities, a non-publicly offered regulated
investment company, the allocable investment expenses of the
REMIC. This information is provided on Schedule Q of Form 1066.
See Treas. Reg. sec. 1.860F-4(e)(1).
In addition, REMICs and issuers of collateralized debt
obligations are required to provide certain tax information upon
request to certain holders (including RICs) of REMIC regular
interests or interests in collateralized debt obligations. This
information must include, for each requested calendar quarter:
(1) the name, address and Employer Identification Number of
the REMIC or collateralized debt obligation,
(2) the CUSIP number of each specified class of REMIC
regular interest or collateralized debt obligation and,
in a new requirement for years after 1991, whether the
information being reported is with respect to a REMIC
regular interest or a collateralized debt obligation,
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(3) interest paid on a collateralized debt obligation, and
the aggregate amount paid for the year if the request
is made for the last calendar quarter of the year,
(4) interest accrued on a REMIC regular interest for each
accrual period any day of which is in the specified
calendar quarter, and the aggregate amount accrued for
the year if the request is made for the last quarter of
the calendar year,
(5) original issue discount ("OID") for each accrual period
any day of which is in the specified calendar quarter,
and the aggregate amount for the calendar year if the
request is made for the last calendar quarter,
(6) the daily portion of OID per $1,000 of original
principal amount for each accrual period any day of
which is in the specified calendar quarter,
(7) the length of the accrual period,
(8) the adjusted issued price of each REMIC regular
interest or collateralized debt obligation at the
beginning of each accrual period any day of which is in
the specified calendar quarter,
(9) information necessary to compute market discount, and
(10) in a new requirement, if the REMIC is a single class
REMIC (that is, if the REMIC would be a trust absent
the REMIC election), information related to the REMIC's
deductible expenses.
The information must be provided on or before the later of the
30th day after the close of the calendar quarter for which the
information was requested or two weeks after receipt of the
request. See Treas. Reg. sec. 1.6049-7(f).
In response to public comments, the final regulations differ
from the proposed regulations in several ways. Under the
previous proposed regulations, holders of REMIC or collateralized
debt obligation interests had been allowed to request the above
information by telephone or in writing. The final regulations
allow the REMIC or issuer to require that information requests be
made only in writing. Of course, if the parties agree, the
information may be provided in any other way agreed upon by the
parties. In another change, the daily portion of OID must be
reported only per $1,000 of original principal amount, and not in
any other proportion.
The Service also issued a separate set of proposed
regulations in response to complaints from REMICs and
collateralized debt obligation issuers which, in part, would
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extend the time for providing the above information from 30 days
to 41 days after the end of the calendar quarter.
Finally, another set of proposed regulations deal with REMIC
qualification requirements, formation of REMICs, and the taxation
of REMICs and REMIC interest holders.
We will keep you informed of further developments.
David J. Mangefrida Jr.
Assistant Counsel - Tax
Attachment
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