Form FORM-8831 Excise Taxes on Excess Inclusions of REMIC Residual Inte

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I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 8831, PAGE 1 of 2.
MARGINS: TOP 13mm (1⁄2 "), CENTER SIDES PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20. INK: BLACK
FLAT SIZE: 216mm (81⁄2 ") x 279mm (11")
PERFORATE: NONE
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

8831

(Rev. November 2005)
Department of the Treasury
Internal Revenue Service

Action

Signature

O.K. to print
Revised proofs
requested

Excise Taxes on Excess Inclusions of
REMIC Residual Interests

Name

Please
Type or
Print

Date

OMB No. 1545-1379

Identifying number

Number, street, and room or suite no. (If a P.O. box, see instructions.)

City or town, state, and ZIP code

Part I
Transfers to Disqualified Organizations. File a separate Form 8831 for each transfer of a residual interest.
Section A—Information on the Transfer
1
2
3

/
/
䊳
Enter the date the residual interest was transferred to a disqualified organization
Within a reasonable time after discovering this transfer was subject to tax under section 860E(e)(1), were
steps taken so that the residual interest you transferred is no longer held by a disqualified organization? 䊳
Yes
No
If you answered “Yes” to question 2, enter the date the disqualified organization disposed of the
/
/
䊳
residual interest
If you answered “Yes” to question 2, the tax due under section 860E(e)(1) will be waived if you pay the amount due under
Regulations section 1.860E-2(a)(7)(ii). Skip Section B and go to Section C to figure the amount due.
If you answered “No” to question 2, use Section B to figure the tax due under section 860E(e)(1). Do not complete Section C.

Section B—Tax Due Under Section 860E(e)(1). Complete this section only if you answered “No” to question 2.
4

5

Enter the present value of the excess inclusions allocable to the residual interest you transferred
that are expected to accrue in each calendar quarter (or part thereof) following the transfer of
that interest to the disqualified organization (see instructions)
Tax due. Multiply line 4 by 35%

4
5

Section C—Amount Due Under Regulations Section 1.860E-2(a)(7)(ii). Complete this section only if you answered
“Yes” to question 2.
6
7

Enter the amount of excess inclusions allocable to the residual interest you transferred that
accrued during the period the disqualified organization held that interest
Amount due. Multiply line 6 by 35%

Part II
8
9
10

Tax on Pass-Through Entities With Interests Held by Disqualified Organizations. File a separate Form
8831 for Part II if you owe tax in Part I.

Enter the ending date of the pass-through entity’s tax year for which this
/
/
䊳
return is being filed
Enter the amount of excess inclusions allocable to interests in the pass-through entity for which
the record holder is a disqualified organization
Tax due. Multiply line 9 by 35%

Part III
11
12
13
14

6
7

9
10

Tax and Payments
11
12
13
14

Enter the amount from line 5, 7, or 10, whichever applies
Amount paid with Form 7004
Amount due. Enter the excess of line 11 over line 12
Overpayment. Enter the excess of line 12 over line 11

Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief,
it is true, correct, and complete.
䊳

䊳

䊳

Signature

Date

Title (if any)

General Instructions
Section references are to the Internal Revenue Code
unless otherwise noted.

Purpose of Form
Use Form 8831 to report and pay:
● The excise tax due under section 860E(e)(1) on
any transfer of a residual interest in a REMIC to a
disqualified organization,
● The amount due under Regulations section
1.860E-2(a)(7)(ii) if the tax under section 860E(e)(1) is
to be waived, or
● The excise tax due under section 860E(e)(6) on
pass-through entities with interests held by

disqualified organizations. All interests in an electing
large partnership are treated as held by disqualified
organizations (see section 774(e) for details).

Definitions
A disqualified organization is:
● The United States, any state or political
subdivision thereof, any foreign government, any
international organization, or any of their agencies or
instrumentalities (except for certain taxable
instrumentalities described in section 168(h)(2)(D)
and the Federal Home Loan Mortgage Corporation);
● Any tax-exempt organization (other than a
farmers’ cooperative described in section 521),
unless that organization is subject to the unrelated
business income tax; and

For Privacy Act and Paperwork Reduction Act Notice, see back of form.

● Any cooperative described in section
1381(a)(2)(C).
A pass-through entity is a regulated investment
company, real estate investment trust, common trust
fund, partnership, trust, estate, or a cooperative
described in section 1381. A person holding an
interest in a pass-through entity as a nominee for
another person is also treated as a pass-through
entity.

Who Must File
You must file Form 8831 if you are liable for the
excise tax in Part I under section 860E(e)(1) (or the
amount due under Regulations section
1.860E-2(a)(7)(ii)) because you transferred a residual
interest in a REMIC to a disqualified organization

Cat. No. 13377A

Form

8831

(Rev. 11-2005)

3
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 8831, PAGE 2 of 2
PRINTS: HEAD TO HEAD
MARGINS: TOP 13mm (1⁄2 "), CENTER SIDES
PAPER: WHITE WRITING, SUB. 20. INK: BLACK
FLAT SIZE: 216mm (81⁄2 ") x 279mm (11")
PERFORATE: NONE
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Form 8831 (Rev. 11-2005)
after March 31, 1988 (unless the transfer was made
under a binding contract in effect on that date). File
a separate Form 8831 for each transfer of a residual
interest.
You will be relieved of the liability for the tax if
you obtain an affidavit from the transferee signed
under penalties of perjury that either furnishes the
transferee’s social security number or states that the
transferee is not a disqualified organization,
provided you do not have actual knowledge at the
time of the transfer that the affidavit is false.
A pass-through entity must file Form 8831 if it is
liable for the tax in Part II under section 860E(e)(6).
The entity must pay this tax if, at any time during
the entity’s tax year, excess inclusions from a
residual interest in a REMIC are allocable to an
interest in the entity for which the record holder is a
disqualified organization. The tax applies to excess
inclusions for periods after March 31, 1988, but only
to the extent the inclusions are allocable either to an
interest in the pass-through entity acquired after
March 31, 1988, or to a residual interest acquired by
the pass-through entity after March 31, 1988. Any
interest acquired under a binding contract in effect
on March 31, 1988, is treated as acquired before
that date. A real estate investment trust, regulated
investment company, common trust fund, or publicly
traded partnership is subject to the tax due under
section 860E(e)(6) only for tax years beginning after
1988.
Generally, a pass-through entity is not subject to
the excise tax under section 860E(e)(6) if it obtains
an affidavit from the record holder signed under
penalties of perjury that either furnishes the record
holder’s social security number or states that the
record holder is not a disqualified organization. The
affidavit provides relief for any period during which
the pass-through entity does not have actual
knowledge that the affidavit is false. However, this
relief does not apply to electing large partnerships.
A pass-through entity that owes both the excise
tax in Part I under section 860E(e)(1) (or the amount
due under Regulations section 1.860E-2(a)(7)(ii)) and
the excise tax in Part II under section 860E(e)(6)
must file a separate form for each tax.

When To File
For the excise tax due under section 860E(e)(1), file
Form 8831 and pay the tax by April 15 of the year
following the calendar year in which the residual
interest is transferred to a disqualified organization.
A pass-through entity must file Form 8831 and pay
the tax due under section 860E(e)(6) by the 15th day
of the 4th month following the close of its tax year
in which the disqualified person is a record holder. If
the due date falls on a Saturday, Sunday, or legal
holiday, file on the next day that is not a Saturday,
Sunday, or legal holiday.
If more time is needed, use Form 7004,
Application for Automatic 6-Month Extension of Time
To File Certain Business Income Tax, Information,
and Other Returns, to request an extension of time
to file Form 8831. However, Form 7004 does not
extend the time for payment of tax.

Where To File
If Form 8831 is being filed by an individual or a
foreign entity, file it with the Internal Revenue
Service Center, Philadelphia, PA 19255. All other
entities must file Form 8831 with the Internal
Revenue Service Center, Cincinnati, OH 45999.

Rounding Off to Whole Dollars
You may round off cents to whole dollars on your
returns and schedules. If you do round to whole dollars, you must round all amounts. To round, drop
amounts under 50 cents and increase amounts from
50 to 99 cents to the next dollar. For example, $1.39
becomes $1 and $2.50 becomes $3.

Page
If you have to add two or more amounts to figure
the amount to enter on a line, include cents when
adding the amounts and round off only the total.

Amended Return
To amend a previously filed Form 8831, file a
corrected Form 8831 marked “Amended” at the top
of the form.

Signature
See the instructions for the “Signature” section of
your federal income tax return.

Interest and Penalties
Interest. Interest is charged on taxes not paid by
the due date. Interest is also charged on certain
penalties. The interest charged is figured at a rate
determined under section 6621.
Late filing penalty. Generally, a penalty of 5% a
month or part of a month, up to a maximum of
25%, is imposed on the net amount of tax due if the
excise tax return is not filed when due.
Late payment penalty. Generally, the penalty for
not paying tax when due is 1⁄2 of 1% of the unpaid
tax, up to a maximum of 25%, for each month or
part of a month the tax remains unpaid.

Specific Instructions
Name and Address
Enter the name shown on your most recently filed
federal income tax return. Include the suite, room,
apartment, or other unit number after the street
address. If the Post Office does not deliver mail to
the street address and you have a P.O. box, show
the box number instead of the street address.

Identifying Number
If you are an individual, enter your social security
number. Other filers, enter your employer
identification number.

Part I
Line 4. The excess inclusions expected to accrue
must be determined as of the date the residual
interest is transferred and must be based on events
that have occurred up to the time of the transfer, the
prepayment and reinvestment assumptions adopted
under section 1272(a)(6) (or that would have been
adopted if the REMIC’s regular interests had been
issued with original issue discount), and any
required or permitted clean-up calls, or required
qualified liquidation provided under the REMIC’s
organizational documents.
The present value of the excess inclusions
expected to accrue is determined by discounting all
remaining excess inclusions expected to accrue on
the residual interest from the end of each calendar
quarter in which those inclusions are expected to
accrue to the date the disqualified organization
acquired the residual interest. The discount rate to
be used in this computation is the applicable federal
rate under section 1274(d)(1) that would apply to a
debt instrument issued on the date the disqualified
organization acquired the residual interest and with
a term that ends on the last day of the last quarter
in which excess inclusions are expected to accrue
for the interest.
The REMIC must furnish the information needed
to figure the amount on line 4 upon your request.
The information must be furnished within 60 days of
the request. The REMIC may charge a fee for this
information.
Line 6. Enter the amounts reported on Schedule Q
(Form 1066), Quarterly Notice to Residual Interest
Holder of REMIC Taxable Income or Net Loss
Allocation, line 2c, to the disqualified organization
for the period it held the residual interest.

2

Part II
Line 9. Enter the amounts reported on Schedule Q
(Form 1066), line 2c, for the tax year of the
pass-through entity that are allocable to all
disqualified organizations that held an interest in the
entity.
Line 10. In general, deduct the amount on line 10 to
figure the ordinary income of the pass-through
entity. For example, a real estate investment trust
deducts the tax to figure its real estate investment
trust taxable income under section 857(b)(2).
However, an electing large partnership excludes the
amount subject to tax (line 9) instead of deducting
the tax (line 10) from its income.

Part III
Line 12. If you filed Form 7004, enter the amount
paid, if any, when you filed that form.
Line 13. You must pay the full amount reported on
line 13. If payment will accompany the form, make
your check or money order payable to the “United
States Treasury.” Write your name, address,
identifying number, and “Form 8831” on the check
or money order.
You may also make your payment using the
Electronic Federal Tax Payment System (EFTPS). To
do so you must be enrolled in EFTPS. To enroll in or
get more information about EFTPS, visit
www.eftps.gov.
Line 14. The IRS will refund the amount on line 14 if
you owe no other taxes.

Privacy Act and Paperwork Reduction Act
Notice. We ask for the information on this form to
carry out the Internal Revenue laws of the United
States. We need it to figure and collect the right
amount of tax. This form is used to determine the
amount of taxes you owe as imposed by section
860E. Section 6011 requires you to provide the
requested information if the tax is applicable to you.
Section 6109 requires you to provide your taxpayer
identification number (SSN or EIN). Routine uses of
this information include giving it to the Department
of Justice for civil and criminal litigation and to
cities, states and the District of Columbia for use in
administering their tax laws. We may also disclose
this information to other countries under a tax treaty,
to federal and state agencies to enforce federal
nontax criminal laws, or to federal law enforcement
and intelligence agencies to combat terrorism. If you
fail to provide this information in a timely manner,
you may be subject to penalties and interest.
You are 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
will vary depending on individual circumstances. The
estimated average time is: Recordkeeping, 4 hr., 32
min.; Learning about the law or the form, 1 hr., 29
min.; Preparing and sending the form to the IRS,
1 hr., 37 min.
If you have comments concerning the accuracy
of these time estimates or suggestions for making
this form simpler, we would be happy to hear from
you. You can write to the Internal Revenue Service,
Tax Products Coordinating Committee,
SE:W:CAR:MP:T:T:SP, 1111 Constitution Ave. NW,
IR-6406, Washington, DC 20224. Do not send the
tax form to this office. Instead, see Where To File,
earlier.