Schedule Q, Quarterly Notice — 2025 Inst 1066 (PDF)

Purpose of Schedule Schedule Q (Form 1066) shows each residual interest holder’s share of the REMIC’s quarterly taxable income (or net loss), the excess inclusion for the residual interest holder’s interest, and the residual interest holder’s share of the REMIC’s section 212 expenses for the quarter.

Although the REMIC isn’t subject to income tax (except on net income from prohibited transactions, net income from foreclosure property, and contributions made after the startup day), the residual interest holders are liable for tax on their shares of the REMIC’s taxable income, whether or not distributed, and must include their shares on their tax returns.

Include in column (e):

Capital losses over the $3,000 limitation (for a REMIC with a startup day before November 12, 1991),
Other nondeductible amounts (such as losses from prohibited transactions and expenses connected with the production of tax-exempt income),
Deductions allocable to prohibited transactions,

Instructions for Form 1066 (2025) 9

Note: Schedule Q (Form 1066) is a separate tax form that isn’t part of Form 1066.

General Instructions For each calendar quarter, complete Schedule Q (Form 1066) for each person who was a residual interest holder at any time during the quarter. File Schedule Q with Form 1066. Give one copy to the residual interest holder by the last day of the month following the month in which the calendar quarter ends. Keep one copy with a copy of Form 1066 as part of the REMIC’s records.

Specific Instructions On each Schedule Q, enter the name, address, and identifying number for each residual interest holder and REMIC. For each residual interest holder that is an individual, you must enter the residual interest holder’s social security number (SSN) (or individual taxpayer identification number (ITIN) for a resident or nonresident alien). For all other residual interest holders, you must enter the residual interest holder’s EIN. However, if a residual interest holder is an IRA, enter the identifying number of the IRA trust. Don’t enter the SSN (or ITIN) of the individual for whom the IRA is maintained.

Item A—What Type of Entity Is This Residual Interest Holder?

State on this line whether the residual interest holder is an individual, a corporation, an estate, a trust, a partnership, an exempt organization, a nominee (custodian), or another REMIC. If the residual interest holder is a nominee, use the following codes to indicate in parentheses the type of entity the nominee represents.

I—Individual.
C—Corporation.
F—Estate or Trust.
P—Partnership.
E—Exempt Organization.
R—REMIC.
IRA—Individual Retirement Arrangement.

Item B—Residual Interest Holder’s Percentage of Ownership

Enter in item B2 the percentage at the end of the calendar quarter. However, if a residual interest holder’s percentage of ownership changed during the quarter, enter in item B1 the percentage immediately before the change. If there are multiple changes in the percentage of ownership during the quarter, attach a statement giving the date and percentage before each change.

Item C—REMIC Assets

Enter in item C the percentage of the REMIC’s assets during the calendar quarter represented by each of the following categories of assets.

Real estate assets under section 856(c)(5)(B).
Assets described in section 7701(a)(19)(C) (relating to the definition of a domestic building and loan association).

These percentages must be computed using the average adjusted basis of the assets held during the calendar quarter. To do this, the REMIC must make the appropriate computation as of the close of each month, week, or day and then average the monthly, weekly, or daily percentages for the quarter. The monthly, weekly, or daily computation period must be applied uniformly during the calendar quarter to both categories of assets, and may not be changed in succeeding calendar quarters without IRS consent. If the percentage of the REMIC’s assets for either category is at least 95%, the REMIC may show “95 or more” for that category in item C.

If less than 95% of the assets of the REMIC are real estate assets (as defined in section 856(c)(5)(B)), the REMIC must also report to any real estate investment trust that holds a residual interest the information specified in Regulations section 1.860F-4(e)(1)(ii)(B). However, if a REMIC is an “eligible REMIC,” as defined in Notice 2012-5, and a percentage of its assets represented by either of the categories of assets described under REMIC assets, earlier, was less than 95% but at least 80%, then the REMIC need only specify in item C that the percentage for that category was at least 80%. For more information, see Notice 2012-5, available on page 291 of Internal Revenue Bulletin 2012-3 at IRS.gov/irb/ 2012-03_IRB#NOT-2012-5 .

Item F—Reconciliation of Residual Interest Holder’s Capital Account

See the instructions for Schedule M, earlier.

Line 1a—Taxable income (net loss) of the REMIC for the calendar quarter. Enter the REMIC’s taxable income (net loss) for the calendar quarter. The sum of the totals for the four quarters in the calendar year must equal the amount shown on Form 1066, Section I, line 15.

Line 1b—Your share of the taxable income (net loss) for the calendar quarter. Enter the residual interest holder’s share of the taxable income (net loss) shown on line 1a (determined by adding the holder’s daily portions under section 860C(a)(2) for each day in the quarter the holder held the residual interest). If line 1a is a loss, enter the residual interest holder’s full share of the loss, without regard to the adjusted basis of the residual interest holder’s interest in the REMIC.

Line 2a—Sum of the daily accruals under section 860E for all residual interests for the calendar quar- ter. Enter the product of the sum of the adjusted issue prices of all residual interests at the beginning of the quarter and 120% of the long-term federal rate (determined on the basis of compounding at the end of each quarter and properly adjusted for the length of such quarter). See section 860E(c) for details.

Line 2b—Sum of the daily accruals under section 860E for your interest. Enter zero if line 2a is zero. Otherwise, divide the amount shown on line 2a by the number of days in the quarter. Multiply the result by the residual interest holder’s percentage of ownership for each day in the quarter that the residual interest holder owned the interest. Total the daily amounts and enter the result.

10 Instructions for Form 1066 (2025)

Line 3. Complete lines 3a and 3b only for residual interest holders who are individuals or other pass-through interest holders (as defined in Temporary Regulations section 1.67-3T).

Line 3a—Section 212 expenses of the REMIC for the calendar quarter. Enter the REMIC’s allocable section 212 expenses for the calendar quarter. The term “allocable section 212 expenses” means the aggregate amount of the expenses paid or accrued in the calendar quarter for which a deduction is allowable under section 212 in determining the taxable income of the REMIC for the calendar quarter.

Section 212 expenses generally include operational expenses such as:

Rent,
Salaries,
Legal fees,
Accounting fees,
Litigation expenses, and
The cost of preparing and distributing reports and notices to interest holders.

Line 3b—Your share of section 212 expenses for the calendar quarter. Enter the residual interest holder’s share of the amount shown on line 3a.

Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United States. You’re required to give us the information. We need it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax.

You’re not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103.

The time needed to complete and file this form and related schedule will vary depending on individual circumstances. The estimated burden for business taxpayers filing this form and the related schedule is approved under OMB control number 1545-0123 and is included in the estimates shown in the instructions for their business income tax return.

If you have comments concerning the accuracy of the time estimates or suggestions for making this form and related schedule simpler, we would be happy to hear from you. You can send us comments through IRS.gov/FormComments . Or, you can write to Internal Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Don’t send tax questions, tax returns, or payments to the above address. Instead, see Where To File , earlier.

Instructions for Form 1066 (2025) 11