Form Schedule Q (Form 1 Schedule Q (Form 1 Quarterly Notice to Residual Interest Holder of REMIC Ta

SCHEDULE Q
(Form 1066)
(Rev. December 2008)

Quarterly Notice to Residual Interest Holder of
REMIC Taxable Income or Net Loss Allocation
For calendar quarter ended

OMB No. 1545-1014

, 20

(See Instructions for Residual Interest Holder on page 2.)

Department of the Treasury
Internal Revenue Service

Residual interest holder’s identifying number

REMIC’s identifying number

Residual interest holder’s name, address, and ZIP code

REMIC’s name, address, and ZIP code

A What type of entity is this residual interest holder (see Form 1066 instructions)? ©
B Enter residual interest holder’s percentage of ownership of all residual interests:
%
1 Before change ©
%
2 End of quarter ©
C Enter the percentage of the REMIC’s assets for the quarter represented by each of the following:
%
1 Real estate assets under section 856(c)(5)(B) ©
2 Assets described in section 7701(a)(19)(C) (relating to the
%
definition of a domestic building and loan association) ©
D Internal Revenue Service Center where REMIC files return ©
E Check applicable boxes: (1)
Final Schedule Q
(2)
Amended Schedule Q
F

Reconciliation of residual interest holder’s capital account
(a)
Capital account
at beginning
of quarter

(b)
Capital
contributed
during quarter

(c)
Taxable income
(net loss) from
line 1b below

(d)
Nontaxable
income

(f)
Withdrawals
and
distributions

(e)
Unallowable
deductions

(g)
Capital account
at end of quarter
(combine cols.
(a) through (f))

(
) (
)
Caution: See Instructions for Residual Interest Holder on page 2 before entering information from this schedule on your tax
return.
1a

1a Taxable income (net loss) of the REMIC for the calendar quarter

1b

b Your share of the taxable income (net loss) for the calendar quarter
2a Sum of the daily accruals under section 860E for all residual interests
for the calendar quarter

2a

b Sum of the daily accruals under section 860E for your interest for the calendar quarter

2b

c Excess inclusion for the calendar quarter for your residual interest (subtract line 2b from line
1b, but do not enter less than zero)

2c

3

Residual interest holders who are individuals or other pass-through interest holders (see Form
1066 instructions). Not required to be completed for other entities.
a Section 212 expenses of the REMIC for the calendar quarter

3a

b Your share of section 212 expenses for the calendar quarter. (If you are an individual, this amount
must be included in gross income in addition to the amount shown on line 1b. See instructions
on page 2 for treatment of this amount as a miscellaneous itemized deduction.)
For Paperwork Reduction Act Notice, see Form 1066 instructions.

Cat. No. 64167S

3b

Schedule Q (Form 1066)

(Rev. 12-2008)

Schedule Q (Form 1066) (Rev. 12-2008)

Instructions for Residual Interest Holder
Section references are to the Internal Revenue Code unless otherwise
noted.

Purpose of Schedule
The real estate mortgage investment conduit (REMIC) uses Schedule Q to
notify you of your share of the REMIC’s quarterly taxable income (or net
loss), the excess inclusion with respect to your interest, and your share of
the REMIC’s section 212 expenses for the quarter.
Keep your copy of this schedule for your records. Do not file it with
your tax return.
Tax treatment of REMIC items. The REMIC is not subject to income tax
(except on net income from prohibited transactions, net income from
foreclosure property, and contributions made after the startup day).
However, you are liable for tax on your share of the REMIC’s taxable
income, whether or not distributed, and you must include your share on
your income tax return. Generally, you must report REMIC items shown
on your Schedule Q (and any attached schedules) or similar statement
consistent with the way the REMIC treated the items on the return it filed.
This rule does not apply if your REMIC falls within the “small REMIC”
exception and does not elect to be subject to the consolidated
entity-level audit procedures.
If your treatment on your original or amended return is (or may be)
inconsistent with the REMIC’s treatment, or if the REMIC was required to
file but has not filed a return, you must file Form 8082, Notice of
Inconsistent Treatment or Administrative Adjustment Request (AAR), with
your original or amended return to identify and explain the inconsistency
(or to note that a REMIC return has not been filed). See sections 860F(e)
and 6222 for the inconsistent treatment rules.
Errors. If you believe the REMIC has made an error on your Schedule Q,
notify the REMIC and ask for a corrected Schedule Q. Do not change any
items on your copy. Be sure that the REMIC sends a copy of the
corrected Schedule Q to the IRS. If you are unable to reach an
agreement with the REMIC about the inconsistency, you must file Form
8082 as explained in the preceding paragraph.

Page

2

Calendar year taxpayers and fiscal year taxpayers
whose tax years end with a calendar quarter
Line 1b—Your share of the taxable income (net loss) for the calendar
quarter. If you are an individual, you must report, as ordinary income or
loss, the total of the amounts shown on line 1b of Schedule Q for each
quarter included in your tax year, after applying any basis limitations, on
Schedule E (Form 1040), Part IV, column (d). If you are not an individual,
report the amounts as instructed on your tax return.
Line 2c—Excess inclusion for the calendar quarter for your residual
interest. The total of the amounts shown on line 2c for all quarters
included in your tax year is the smallest amount you may report for that
year as your:
● Taxable income or
● Alternative minimum taxable income (AMTI).
Except where necessary or appropriate to prevent avoidance of Federal
income tax the preceding sentence does not apply to a financial
institution entitled to relief under section 1616(c)(4) of the Small Business
Job Protection Act of 1996, Pub. Law No. 104-188, 110 Stat. 1755
(August 20, 1996) (the Act). That provision generally allows certain
financial institutions to continue using the rules of section 860E(a)(2) prior
to its amendment by the Act. (Special rules apply to members of affiliated
groups filing consolidated returns and to which section 1616(c)(4) of the
Act applies. See sections 860E(a)(3) and (4) prior to their amendment by
the Act.) The line 2c amount is treated as “unrelated business taxable
income” if you are an exempt organization subject to the unrelated
business tax under section 511. If you are an individual, enter this
amount as an item of information on Schedule E (Form 1040), Part IV,
column (c). If you must also report this amount as your taxable income
(or AMTI), enter the amount shown on line 2c on the taxable income (or
AMTI) line of your return and write “Sch. Q” on the dotted line to the left
of the entry space.

Limitation on losses. Generally, you may not claim your share of the
quarterly net loss from a REMIC that is greater than the adjusted basis of
your residual interest in the REMIC at the end of the calendar quarter
(determined without regard to your share of the net loss of the REMIC for
that quarter). Any loss disallowed because it exceeds your adjusted basis
is treated as incurred by the REMIC in the following quarter, but only for
the purpose of offsetting your share of REMIC taxable income for that
quarter.

Line 3b—Your share of section 212 expenses for the calendar
quarter. If you are an individual or other pass-through interest holder (as
defined in Temporary Regulations section 1.67-3T), you must report as
ordinary income the total of the amounts shown on line 3b of Schedule Q
for each quarter included in your tax year. This amount must be reported
in addition to your share of taxable income (net loss) determined above. If
you are an individual, report this total on Schedule E (Form 1040), Part IV,
column (e). If you are not an individual, report the amounts as instructed
on your tax return.
If you are an individual and itemize your deductions on your return, you
may be able to deduct the total as a miscellaneous itemized deduction. It
should be included with the other miscellaneous deductions that are
subject to the 2% of adjusted gross income limit.

Items that increase your basis are:
1. Money and your adjusted basis in property contributed to the
REMIC.

Fiscal year taxpayers whose tax years do not end
with a calendar quarter

2. Your share of the REMIC’s taxable income.
3. Any income reported under section 860F(b)(1)(C)(ii).
Items that decrease your basis are:
1. Money and the fair market value of property distributed to you.
2. Your share of the REMIC’s losses.
3. Any deduction claimed under section 860F(b)(1)(D)(ii).
Passive activity limitations under section 469. Amounts includible in
income (or deductible as a loss) by a residual interest holder are treated
as portfolio income (loss). Such income (or loss) is not taken into account
in determining the loss from a passive activity under section 469.
Excise taxes on excess inclusions of REMIC residual interests. Use
Form 8831, Excise Taxes on Excess Inclusions of REMIC Residual
Interests, to report and pay (a) the excise tax due under section
860E(e)(1) if you transferred a residual interest in a REMIC to a
disqualified organization; (b) 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 (c)
the excise tax due under section 860E(e)(6) if the residual interest holder
is a pass-through entity with interests held by a disqualified organization.
See Form 8831 for more details and for definitions of “disqualified
organization” and “pass-through entity.”

Specific Instructions
Item C—REMIC assets. This information is provided only for the use of
a residual interest holder such as a real estate investment trust or
domestic building and loan association that needs to know the
composition of the REMIC’s underlying assets.

The same rules explained above for calendar year taxpayers apply,
except that you must figure the amount to report from lines 1b, 2c, and
3b based on your tax year. For each calendar quarter that overlaps the
beginning or end of your tax year, divide the amount shown on line 1a,
2a, or 3a (whichever is applicable) by the number of days in that quarter.
Multiply the result by your percentage of ownership of all residual
interests for each day of your tax year included in that quarter.
Line 1b. Total the daily amounts of taxable income (net loss) for the
overlapping quarters. Add these amounts to the amounts shown on line
1b for the full quarters included in your tax year. Report the resulting
income or loss in the same manner as explained above for calendar year
taxpayers.
Line 2c. Total the daily amounts for the overlapping quarters. Subtract
this total from your share of the taxable income for the part of the quarter
included in your tax year, as previously figured. Add the resulting
amounts for the overlapping quarters to the amounts shown on line 2c
for the full quarters included in your tax year and report it in the same
manner as explained above for calendar year taxpayers.
Line 3b. Total the daily amounts of section 212 expenses for the
overlapping quarters. Add these amounts to the amounts shown on line
3b for the full quarters included in your tax year. Report the resulting
amount in the same manner as explained above for calendar year
taxpayers.