SECTION 4. BACKGROUND—REMIC

REPORTING

.01 Section 1.860F–4(e)(1)(ii)(A) provides that for calendar quarters after 1988, a REMIC must provide to each of its residual interest holders information regarding (among other items) the percentage of REMIC assets that are real estate assets defined in section 856(c)(5)(B), ¹ computed by reference to the average adjusted basis (as defined in section 1011) of the REMIC assets during the calendar quarter (as described in § 1.860F–4(e)(1)(iii)). If the percentage of REMIC assets represented by real estate assets is at least 95 percent, then the REMIC need only specify that the percentage of real estate assets was at least 95 percent.

.02 Section 1.860F–4(e)(1)(ii)(B) provides that if, for any calendar quarter after 1988, less than 95 percent of the assets of the REMIC are real estate assets defined in section 856(c)(5)(B), then, for that calendar quarter, the REMIC must also provide to any REIT that holds a residual interest the following information—

(1) The percentage of REMIC assets described in section 856(c)(4)(A), computed by reference to the average adjusted basis of the REMIC assets during the calendar quarter (as described in § 1.860F–4(e)(1)(iii)),

(2) The percentage of REMIC gross income (other than gross income from prohibited transactions defined in section 860F(a)(2)) described in section

856(c)(3)(A) through (E), computed as of the close of the calendar quarter, and

(3) The percentage of REMIC gross income (other than gross income from prohibited transactions defined in section 860F(a)(2)) described in section 856(c)(3)(F) (which refers to income or gain from foreclosure property), computed as of the close of the calendar quarter. For this purpose, the term “foreclosure property” has the meaning specified in section 860G(a)(8) (which governs REMICs), rather than the closely related definition of “foreclosure property” in section 856(e) (which otherwise would determine the income or gain that is described in section 856(c)(3)(F)). .03 Notice 2012–5, this bulletin, provides that for purposes of an eligible REMIC’s reporting obligation to residual interest holders under § 1.860F–4(e)(1)(ii), if the percentage of REMIC assets represented by real estate assets is less than 95 percent but at least 80 percent, then the REMIC need only specify on Schedule Q (Form 1066), Quar- terly Notice to Residual Interest Holder of REMIC Taxable Income or Net Loss Allocation, that the percentage for that category was at least 80 percent.