1066 Instructions for Form 1066

2022

Instructions for Form 1066

Department of the Treasury
Internal Revenue Service

U.S. Real Estate Mortgage Investment Conduit
(REMIC) Income Tax Return
Section references are to the Internal Revenue Code unless
otherwise noted.

Future Developments

For the latest information about developments related to Form
1066 and its separate instructions, such as legislation enacted
after they were published, go to IRS.gov/Form1066.

What’s New
Increased failure-to-file penalty. The minimum penalty under
section 6651(a) for the failure to file Form 1066 within 60 days of
the due date has increased to the smaller of the tax due or $450.
The penalty under section 6698 that the IRS may charge when
no tax is due has increased to $220 for each person who was a
residual interest holder in the REMIC at any time during the year
for each month or part of a month the return is late, for up to 12
months. For more information, see Late filing penalty, later.

Reminders
Bipartisan Budget Act. The Bipartisan Budget Act of 2015
(BBA) created a new centralized partnership audit regime that
applies to a REMIC for tax years beginning after 2017. Under the
centralized partnership audit regime, any adjustments to the
partnership-related items of a REMIC are determined at the
REMIC level.
Partnership representative. Under the centralized partnership
audit regime, a REMIC is required to designate a partnership
representative if it had more than one residual interest holder at
any time during the tax year and it didn't elect out of the
centralized partnership audit regime. The partnership
representative will have the sole authority to act on behalf of the
REMIC under the centralized partnership audit regime. The
person designated by the REMIC as the partnership
representative must have a substantial presence in the United
States. For more information, see Designation of Partnership
Representative, later.

Photographs of Missing Children

The IRS is a proud partner with the National Center for Missing &
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selected by the Center may appear in instructions on pages that
would otherwise be blank. You can help bring these children
home by looking at the photographs and calling
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How To Get Forms and Publications
Internet. You can access the IRS website 24 hours a day, 7
days a week, at IRS.gov to:
• Download forms, instructions, and publications;
• Order IRS products online;
• Research your tax questions online;
• Search publications online by topic or keyword;
• View Internal Revenue Bulletins (IRBs) published in the last
few years; and
• Sign up to receive local and national tax news by email.

Nov 7, 2022

General Instructions
Purpose of Form

File Form 1066 to report the income, deductions, and gains and
losses from the operation of a REMIC. In addition, the form is
filed by the REMIC to report and pay the taxes on net income
from prohibited transactions, net income from foreclosure
property, and contributions after the startup day.

Who Must File

An entity must file Form 1066 if it elected to be treated as a
REMIC for its first tax year (and the election is still in effect) and
it meets the section 860D(a) requirements listed below.
A REMIC is any entity that:

• Elects to be treated as a REMIC for the tax year and all prior

tax years;
• All of the interests in which are regular interests or residual
interests;
• Has one (and only one) class of residual interests and all
distributions, if any, with respect to such interests are pro rata;
• Substantially all of the assets consist of qualified mortgages
and permitted investments as of the close of the third month
beginning after the startup day (defined in the instructions for
Item B—Date REMIC started, later) and at all times thereafter;
• Has a calendar tax year; and
• For which reasonable arrangements have been designed to
ensure that residual interests aren't held by disqualified
organizations (as defined in section 860E(e)(5)), and information
needed to apply section 860E(e) will be made available by the
entity.

!

CAUTION

The last item in the above list doesn't apply to REMICs
with a startup day before April 1, 1988 (or those formed
under a binding contract in effect on March 31, 1988).

See section 860G for definitions and special rules. See
section 860D(a) regarding qualification as a REMIC during a
qualified liquidation.

Making the Election

The election to be treated as a REMIC is made by timely filing,
for the first tax year of its existence, a Form 1066 and having it
signed by an authorized person. Once the election is made, it
stays in effect for all years until it is terminated.

First Tax Year

For the first tax year of a REMIC's existence, the REMIC must
furnish the following in a separate statement attached to the
REMIC's initial return.
• Information concerning the terms of the regular interests and
the designated residual interest of the REMIC, or a copy of the
offering circular or prospectus containing such information.
• A description of the prepayment and reinvestment
assumptions made in accordance with section 1272(a)(6) and its
regulations, including documentation supporting the selection of
the prepayment assumption.

Cat. No. 64231R

Termination of Election

Rounding Off to Whole Dollars

If the entity ceased to qualify as a REMIC under the
requirements of section 860D(a) in 2022, the election to be a
REMIC is terminated for 2022 and all future years. For 2022 and
all future years, you must file the tax form for similarly organized
entities (corporations, partnerships, trusts, etc.).

The REMIC may round off cents to whole dollars on its returns
and schedules. If the REMIC does round to whole dollars, it 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).

When To File

If two or more amounts must be added to figure the amount
on a line, include cents when adding the amounts and round off
only the total.

Generally, REMICs must file the 2022 Form 1066 by March 15,
2023. However, if the entity will file its final return in 2022, Form
1066 is due by the 15th day of the 3rd month following the date
the REMIC ceased to exist.

Recordkeeping

The REMIC’s records must be kept as long as their contents
may be material in the administration of any Internal Revenue
law. Copies of the filed tax returns should also be kept as part of
the REMIC's records. See Pub. 583, Starting a Business and
Keeping Records, for more information.

If you need more time to file Form 1066, file Form 7004,
Application for Automatic Extension of Time To File Certain
Business Income Tax, Information, and Other Returns, to
request an automatic extension. You must file Form 7004 by the
regular due date of Form 1066.

Final Return

Period Covered

If the REMIC ceases to exist during the year, check the box on
Form 1066, page 1, item D(1).

File the 2022 return for:
1. Calendar year 2022;
2. Short tax years beginning and ending in 2022; or
3. Short tax years beginning and ending in 2023, if the 2023
Form 1066 isn't available by the time the REMIC is required to
file its 2023 return. Even though the REMIC is filing the 2023 tax
return on a 2022 Form 1066, any tax law changes effective after
December 31, 2022, have to be applied on the tax return.

The box on Schedule Q (Form 1066), item E(1), should also
be checked to indicate when the schedule is for the final quarter
of the year.

Amended Return

If the REMIC files its return and later becomes aware of changes
it must make to income, deductions, or other items, the REMIC
should then file:
• Form 1065-X, Amended Return or Administrative Adjustment
Request (AAR); and
• An amended Schedule Q (Form 1066) for each residual
interest holder, and check the box on item E(2). Give corrected
Schedules Q (Form 1066) to each residual interest holder.

In the case of (2) or (3) above, fill in the dates for the
short tax year at the top of the form.

!

CAUTION

Private Delivery Services

REMICs can use certain private delivery services (PDSs)
designated by the IRS to meet the “timely mailing as timely filing”
rule for tax returns. Go to IRS.gov/PDS for the current list of
PDSs.

If the REMIC's federal return is changed for any reason, it
may affect its state return. This would include changes made as
a result of an examination of the REMIC’s return by the IRS.
Contact the state tax agency where the state return is filed for
more information.

The PDS can tell you how to get written proof of the mailing
date.

Assembling the Return

For the IRS mailing address to use if you’re using a PDS, go
to IRS.gov/PDSstreetAddresses.

!

CAUTION

If you need more space to report items shown on the forms or
schedules, attach separate sheets reporting the items. Use the
same size and format as on the printed forms. But show the
totals on the printed forms. Be sure to enter the REMIC's name
and employer identification number (EIN) on each sheet.

PDSs can't deliver items to P.O. boxes. You must use
the U.S. Postal Service to mail any item to an IRS P.O.
box address.

You must complete every applicable entry space on Form
1066. If you attach statements, don’t write “See Attached”
instead of completing the entry spaces on this form.

Where To File

If the REMIC's principal business, office, or agency is located in
the United States, then file the return at:

Other Forms and Returns That May Be Required

Department of the Treasury
Internal Revenue Service
Ogden, UT 84201-0007

Form 1096, Annual Summary and Transmittal of U.S. Information Returns. Use this form to summarize and send
information returns to the IRS.

If the REMIC's principal business, office, or agency is located
in a foreign country or U.S. possession, then file the return at:

Form 1098, Mortgage Interest Statement. This form is used
to report the receipt from any individual of $600 or more of
mortgage interest and points in the course of the REMIC's trade
or business.

Internal Revenue Service
P.O. Box 409101
Ogden, UT 84409

Forms 1099-A, B, C, INT, LTC, MISC, NEC, OID, R, S, and
SA. Use these information returns to report acquisitions or
abandonments of secured property; proceeds from broker and
barter exchange transactions; cancellation of debt; interest
income; certain payments made under a long-term care
insurance contract and certain accelerated death benefits;
miscellaneous information; nonemployee compensation; original
issue discount; distributions from pensions, annuities, retirement

Accounting Method

A REMIC must compute its taxable income (or net loss) using
the accrual method of accounting. See section 860C(b). For
more information about the accrual method of accounting, see
Pub. 538.
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Instructions for Form 1066 (2022)

institution to make a same-day wire payment, go to IRS.gov/
SameDayWire.

or profit-sharing plans, individual retirement arrangements
(IRAs), insurance contracts, etc.; proceeds from real estate
transactions; and distributions from an HSA, Archer MSA, or
Medicare Advantage MSA. Also, use these returns to report
amounts that were received as a nominee on behalf of another
person.
Generally, a REMIC must file Forms 1099-INT and 1099-OID,
as appropriate, to report accrued income of $10 or more of
regular interest holders. See Regulations section 1.6049-7. Also,
every REMIC must file Forms 1099-MISC if it makes payments
of rents, commissions, or other fixed or determinable income
(see section 6041) totaling $600 or more to any one person in
the course of its trade or business during the calendar year.
For more details, see the General Instructions for Certain
Information Returns.

Interest and Penalties
Interest. Interest is charged on taxes not paid by the due date,
even if an extension of time to file is granted. Interest is also
charged on penalties imposed for failure to file, negligence,
fraud, substantial valuation misstatements, substantial
understatements of tax, and reportable transaction
understatements from the due date (including extensions) to the
date of payment. The interest charge is figured at a rate
determined under section 6621.
Late filing penalty. A penalty may be charged if the return is
filed after the due date (including extensions) or the return
doesn't show all the information required, unless each failure is
due to reasonable cause and not due to willful neglect.
If you receive a notice about a penalty after you file this
return, reply to the notice with an explanation of why the return
was late. We will determine if you meet the reasonable-cause
criteria. Don't attach an explanation when you file your return.
If taxes are due, we will charge a section 6651 penalty of 5%
of the unpaid tax for each month or part of a month the return is
late, up to a maximum of 25% of the unpaid tax; or, if the return
is 60 days or more late, $450 or the balance of the tax due on
the return, whichever is smaller. If no tax is due, we may charge
a section 6698 penalty of $220 for each person who was a
residual interest holder in the REMIC at any time during the year
for each month or part of a month the return is late, for up to 12
months. Although we can charge both the section 6651 and
section 6698 penalties when taxes are due, we will generally
charge only one of the penalties, whichever is greater.

Form 8275, Disclosure Statement; and Form 8275-R, Regulation Disclosure Statement. Use these forms to disclose
items or positions taken on a tax return that aren't otherwise
adequately disclosed on the return or that are contrary to
Treasury regulations (to avoid parts of the accuracy-related
penalty or certain preparer penalties).
Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business. Generally, this form is used to
report the receipt of more than $10,000 in cash or foreign
currency in one transaction or a series of related transactions.
Form 8811, Information Return for Real Estate Mortgage Investment Conduits (REMICs) and Issuers of Collateralized
Debt Obligations. A REMIC uses this form to provide the
information required by Regulations section 1.6049-7(b)(1)(ii).
This information will be published in Pub. 938, Real Estate
Mortgage Investment Conduits (REMICs) Reporting Information
(And Other Collateralized Debt Obligations (CDOs)). This
publication contains a directory of REMICs.
Pub. 938 isn't printed. Instead, it is available on the IRS
website. For more information about Pub. 938, go to IRS.gov/
Pub938.

Late payment penalty. The penalty for not paying the tax when
due is usually 1/2 of 1% of the unpaid tax for each month or part
of a month the tax is unpaid. The penalty can't exceed 25% of
the unpaid tax. The penalty won't be charged if you can show
reasonable cause for not paying on time.
Other penalties. Penalties can also be imposed for negligence,
substantial understatements of tax, reportable transaction
understatements, and fraud. See sections 6662, 6662A, and
6663.

Form 8822-B, Change of Address or Responsible Party—Business. This form is used to inform the IRS of a new
REMIC address if the change is made after filing Form 1066.

Payment of Tax Due

Contributions to the REMIC

The REMIC must pay the tax due (page 1, Section II, line 3) in
full by the 15th day of the 3rd month following the end of the tax
year.

Generally, no gain or loss is recognized by the REMIC or any of
the regular or residual interest holders when property is
transferred to the REMIC in exchange for an interest in the
REMIC. The adjusted basis of the interest received equals the
adjusted basis of the property transferred to the REMIC.

Electronic deposit requirement. REMICs must use
electronic funds transfer (EFT) to make all federal tax deposits
(such as deposits of employment tax, excise tax, and income
tax). Generally, an EFT is made using the Electronic Federal Tax
Payment System (EFTPS). If you don't want to use EFTPS, you
can arrange for your tax professional, financial institution, payroll
service, or other trusted third party to make electronic deposits
on your behalf.
To get more information about EFTPS or to enroll in EFTPS,
go to EFTPS.gov or call 800-555-4477. Additional information
about EFTPS is also available in Pub. 966.

The basis to the REMIC of property transferred by a regular
or residual interest holder is its fair market value immediately
after its transfer.
If the transferor holds a regular interest and if the issue price
of the regular interest is more than its adjusted basis, the excess
is included in income by the regular interest holder for the
applicable tax years as if the excess were market discount on a
bond and the holder had made an election under section
1278(b) to include this market discount currently. If the transferor
holds a residual interest and if the issue price of the regular
interest is more than its adjusted basis, the excess is amortized
and included in the residual interest holder's income ratably over
the anticipated weighted average life of the REMIC (as defined
in Regulations section 1.860E-1(a)(3)(iv)).

Same-day wire payment option. If the REMIC fails to submit a
deposit transaction on EFTPS by 8 p.m. Eastern time the day
before the date a deposit is due, it can still make its deposit on
time by using the Federal Tax Collection Service (FTCS) to
make a same-day wire payment. To use the same-day wire
payment method, the REMIC will need to make arrangements
with its financial institution ahead of time. Please check with the
financial institution regarding availability, deadlines, and costs.
Financial institutions may charge a fee for payments made this
way. To learn more about the information required by a financial
Instructions for Form 1066 (2022)

If the transferor holds a regular interest and if the adjusted
basis of the regular interest is more than its issue price, the
regular interest holder treats the excess as amortizable bond
premium subject to the rules of section 171. If the transferor
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holds a residual interest and if the adjusted basis of the residual
interest is more than its issue price, the excess is deductible
ratably over the anticipated weighted average life of the REMIC
(as defined in Regulations section 1.860E-1(a)(3)(iv)).

Specific Instructions
General Information

Payments Subject to Withholding at Source

Name, address, and EIN. Print or type the REMIC's legal
name and address on the appropriate lines. Include the suite,
room, or other unit number after the street address. If the Post
Office doesn't deliver mail to the street address and the REMIC
has a P.O. box, show the box number instead. If the REMIC
receives its mail in care of a third party (such as an accountant or
attorney), enter on the street address line “C/O” followed by the
third party's name and street address or P.O. box. If the REMIC
has changed its address since it last filed a return (including a
change to an “in care of” address), check the box for item D(3),
Address change.

If there are any nonresident alien individuals, foreign
partnerships, or foreign corporations as regular interest holders
or residual interest holders, and the REMIC has items of gross
income from sources within the United States (see sections 861
through 865), see Form 1042, Annual Withholding Tax Return
for U.S. Source Income of Foreign Persons.

Who Must Sign
Startup day after November 9, 1988. For a REMIC with a
startup day after November 9, 1988, Form 1066 may be signed
by any person who could sign the return of the entity in the
absence of the REMIC election. Thus, the return of a REMIC that
is a corporation or trust would be signed by a corporate officer or
a trustee, respectively. For REMICs with only segregated pools
of assets, the return would be signed by any person who could
sign the return of the entity owning the assets of the REMIC
under applicable state law.

Note. If a change in address or responsible party occurs after
the return is filed, use Form 8822-B to notify the IRS of the
change.
Enter the REMIC's EIN on Form 1066, page 1, item A. If the
REMIC doesn't have its own EIN, it must apply for one. A REMIC
may apply for an EIN by one of the methods discussed below.
• Online by going to IRS.gov/EIN. The EIN is issued
immediately once the application information is validated.
• By mailing or faxing Form SS-4 to the IRS.
If the REMIC hasn't received its EIN by the time the return is due,
write “Applied for” in the space for the EIN. For more details, see
Pub. 583.

Paid preparer's information. If someone is paid to prepare the
return, the preparer must sign the return and complete the “Paid
Preparer Use Only” area.
The paid preparer must:
• Have a valid Preparer Tax Identification Number (PTIN),
• Complete the required preparer information,
• Sign the return in the space provided for the preparer's
signature, and
• Give the REMIC a copy of the return.

Item B—Date REMIC started. Enter the “startup day” selected
by the REMIC.
The startup day is the day on which the REMIC issued all of
its regular and residual interests. However, a sponsor may
contribute property to a REMIC in exchange for regular and
residual interests over any period of 10 consecutive days, and
the REMIC may designate any 1 of those 10 days as the startup
day. The day so designated is then the startup day, and all
interests are treated as issued on that day.

Note. A paid preparer may sign original returns, amended
returns, or requests for filing extensions by rubber stamp,
mechanical device, or computer software program.

Paid Preparer Authorization

Item C—Total assets at end of tax year. Enter the total
assets of the REMIC. If there are no assets at the end of the tax
year, enter the total assets as of the beginning of the tax year.

If the REMIC wants to allow the IRS to discuss its 2022 tax return
with the paid preparer who signed it, check the "Yes" box in the
signature area of the return. This authorization applies only to
the individual whose signature appears in the "Paid Preparer
Use Only" section of the REMIC's return. It doesn't apply to the
firm, if any, shown in that section.

Section I
Line 1—Taxable interest. Enter the total taxable interest.
Taxable interest is interest that is included in ordinary income
from all sources except interest exempt from tax and interest on
tax-free covenant bonds. You may elect to reduce the amount of
interest accrued on taxable bonds by the amount of amortizable
bond premium on those bonds attributable to the current tax
year. See sections 171(c) and 171(e) for details.

If the “Yes” box is checked, the REMIC is authorizing the IRS
to call the paid preparer to answer any questions that may arise
during the processing of its return. The REMIC is also
authorizing the paid preparer to:

• Give the IRS any information that is missing from the return;
• Call the IRS for information about the processing of the return

Line 2—Accrued market discount under section 860C(b)(1)
(B). Enter the amount of market discount attributable to the
current tax year determined on the basis of a constant interest
rate under the rules of section 1276(b)(2).

or the status of any related refund or payment(s); and
• Respond to certain IRS notices that the REMIC has shared
with the preparer about math errors, offsets, and return
preparation.

Line 4—Ordinary gain or (loss). Enter the net gain or (loss)
from Form 4797, Sales of Business Property, Part II.

The REMIC isn't authorizing the paid preparer to receive any
refund check, bind the REMIC to anything (including any
additional tax liability), or otherwise represent the REMIC before
the IRS.

Line 5—Other income. Attach a statement listing by type and
amount any other taxable income not reported on lines 1 through
4. If there is only one item of other income, describe it in
parentheses to the left of the entry space on line 5 instead of
attaching a statement.
If the REMIC issued regular interests at a premium, the net
amount of the premium is income that must be prorated over the
term of these interests. Include this income on line 5.
Generally, cancellation of REMIC debt (for example,
cancellation of unpaid principal and accrued but unpaid interest

The authorization can't be revoked. However, the
authorization will automatically end no later than the due date
(excluding extensions) for filing the REMIC's 2023 tax return. If
the REMIC wants to expand the paid preparer's authorization or
revoke the authorization before it ends, see Pub. 947, Practice
Before the IRS and Power of Attorney.
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Instructions for Form 1066 (2022)

Schedule J
Part I—Tax on Net Income From Prohibited
Transactions

owed to a REMIC regular interest holder) should be recognized
as income and reported on line 5. Attach a supporting statement
to line 5 to separately disclose income from cancellation of
REMIC debt.
REMICs with a startup date before November 12, 1991, enter
any capital gain or (loss) on line 5. The REMIC can use the
Schedule D, included in the 2011 Form 1066, or a statement
showing the same information as it appears on the Schedule D,
included in the 2011 Form 1066, to figure the capital gain (loss).
Attach the schedule or statement to Form 1066.

Losses not included. Don't net losses from prohibited
transactions against income or gains from prohibited
transactions in determining the amounts to enter on lines 1a
through 1d. These losses aren't deductible in computing net
income from prohibited transactions.
For purposes of lines 1a and 1d, the term “prohibited
transactions” doesn't include any disposition that is required to
prevent default on a regular interest where the threatened
default resulted from a default on one or more qualified
mortgages, or to facilitate a clean-up call. A clean-up call is the
redemption of a class of regular interests when, by reason of
prior payments with respect to those interests, the administrative
costs associated with servicing that class outweigh the benefits
of maintaining the class. It doesn't include the redemption of a
class in order to profit from a change in interest rates.

Deductions—(lines 7 through 14). Include only deductible
amounts on lines 7 through 14. A REMIC isn't allowed any of the
following deductions in computing its taxable income.
• The net operating loss deduction.
• The deduction for taxes paid or accrued to foreign countries
and U.S. possessions.
• The deduction for charitable contributions.
• The deduction for depletion under section 611 for oil and gas
wells.
• Losses or deductions allocable to prohibited transactions.

Line 1a—Gain from certain dispositions of qualified mortgages. Enter the amount of gain from the disposition of any
qualified mortgage transferred to the REMIC other than a
disposition from:
• The substitution of a qualified replacement mortgage for a
qualified mortgage or the repurchase in lieu of substitution of a
defective obligation;
• The foreclosure, default, or imminent default of the mortgage;
• The bankruptcy or insolvency of the REMIC; or
• A qualified liquidation.
See section 860F(a) for details and exceptions.

Line 9—Amount accrued to regular interest holders in the
REMIC that is deductible as interest. Regular interests in the
REMIC are treated as indebtedness for federal income tax
purposes. Enter the amount of interest, including original issue
discount, accruing to regular interest holders for the tax year.
Don't deduct any amounts paid or accrued for residual interests
in the REMIC.
Line 10—Other interest. Don't include interest deducted on
line 9 or interest on indebtedness incurred or continued to
purchase or carry obligations on which the interest is wholly
exempt from income tax. You may elect to include amortization
of bond premium on taxable bonds acquired before 1988 unless
you elected to offset amortizable bond premium against the
interest accrued on the bond (see the Section I, line 1,
instructions). Don't include any amount attributable to a
tax-exempt bond.

Line 1b—Income from nonpermitted assets. Enter the
amount of any income received or accrued during the year
attributable to any asset other than a qualified mortgage or
permitted investment. See section 860G(a) for definitions.
Line 1c—Compensation for services. Enter the receipt by the
REMIC of any amount representing a fee or other compensation
for services.

Line 11—Taxes. If you have to pay tax on net income from
foreclosure property, you should include this tax (from
Schedule J, line 10) on line 11 of Form 1066.

Line 1d—Gain from the disposition of cash flow investments (except from a qualified liquidation). Enter the
amount of gain from the disposition of any cash flow investment
except from a qualified liquidation. A cash flow investment is any
investment of amounts received under qualified mortgages for a
temporary period (not more than 13 months) before distribution
to holders of interests in the REMIC. See section 860F(a)(4) for
the definition of a qualified liquidation.

Note. See section 164(d) for apportionment of taxes on real
property between the seller and purchaser.
Enter taxes accrued during the tax year but don't include the
following.
• Federal income taxes (except the tax on net income from
foreclosure property).
• Foreign or U.S. possession income taxes.
• Taxes not imposed on the REMIC.
• Taxes, including state or local sales taxes, that are paid or
incurred in connection with an acquisition or disposition of
property. Such taxes must be treated as a part of the cost of the
acquired property or, in the case of a disposition, as a reduction
in the amount realized on the disposition.

Part II—Tax on Net Income From Foreclosure
Property
For a definition of foreclosure property, see the instructions for
Schedule L, line 1c, later. Net income from foreclosure property
must also be included in the computation of taxable income (or
net loss) shown on Form 1066, page 1, Section I.

Line 12—Depreciation. See the Instructions for Form 4562,
Depreciation and Amortization, or Pub. 946, How To Depreciate
Property, to figure the amount of depreciation to enter on this
line. You must complete and attach Form 4562 if the REMIC
placed property in service during 2022, claims a section 179
expense deduction, or claims depreciation on any car or other
listed property.

Line 6—Gross income from foreclosure property. Don't
include on line 6 amounts described in section 856(c)(3)(A), (B),
(C), (D), (E), or (G).
Line 8—Deductions. Only those expenses that are directly
connected with the production of the income shown on line 7
may be deducted to figure net income from foreclosure property.
Allowable deductions include depreciation on foreclosure
property, interest accrued on debt of the REMIC attributable to
the carrying of foreclosure property, real estate taxes, and fees
charged by an independent contractor to manage foreclosure
property. Don't deduct general overhead and administrative
expenses.

Line 13—Other deductions. Attach a statement listing by type
and amount any other allowable deductions (such as bad debt
deductions) for which no line is provided on Form 1066. If there
is only one item of other deductions, describe it in parentheses
to the left of the entry on line 13 instead of attaching a statement.

Instructions for Form 1066 (2022)

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1. At any time during the 2022 calendar year, the REMIC
had a financial interest in or signature or other authority over any
foreign financial account, including bank, securities, or other
types of financial accounts in a foreign country (see FinCEN
Form 114, Report of Foreign Bank and Financial Accounts
(FBAR)); and
a. The combined value of the accounts was more than
$10,000 at any time during the calendar year, and
b. The account wasn't with a U.S. military banking facility
operated by a U.S. financial institution.
2. The REMIC owns more than 50% of the stock in any
corporation that would answer “Yes” to item 1 above.

Line 10—Tax on net income from foreclosure property.
The REMIC is allowed a deduction for the amount of tax shown
on this line. Include this amount in computing the deduction for
taxes entered on Form 1066, page 1, Section I, line 11.

Part III—Tax on Contributions After the Startup
Day
Don't complete this part if the startup day was before July 1,
1987. For this purpose, startup day means any day selected by a
REMIC that is on or before the first day on which interests in the
REMIC are issued.
Line 11—Tax. Enter the amount of contributions received
during the calendar year after the startup day (as defined in the
prior paragraph). See section 860G(d). Don't include cash
contributions described next.
• Any contribution to facilitate a clean-up call or a qualified
liquidation.
• Any payment in the nature of a guarantee.
• Any contribution during the 3-month period beginning on the
startup day.
• Any contribution to a qualified reserve fund by any holder of a
residual interest in the REMIC.
Attach a statement showing your computation.

If the “Yes” box is checked, do the following.

• Enter the name of the foreign country or countries where the

foreign account(s) is held in the space provided on the form.
Attach a separate sheet if more space is needed.
• Electronically file FinCEN Form 114, also referred to as
FBAR, with the Department of the Treasury using the FinCEN's
BSA E-Filing System. Because FinCEN Form 114 isn't a tax
form, don't file it with Form 1066.
Go to fincen.gov for more information.
Item I—Foreign trust. The REMIC may be required to file Form
3520, Annual Return To Report Transactions With Foreign
Trusts and Receipt of Certain Foreign Gifts, if:
• It directly or indirectly transferred money or property to a
foreign trust (for this purpose, any U.S. person who created a
foreign trust is considered a transferor);
• It is treated as the owner of any part of the assets of a foreign
trust under the grantor trust rules; or
• It received a distribution from a foreign trust.
For more information, see the Instructions for Form 3520.

Additional Information

Be sure to answer the questions and provide other information in
items E through L.
Item E—Type of entity. Check the box for the entity type of the
REMIC recognized under state or local law. If the REMIC isn't a
separate entity under state or local law, check the box for
“Segregated Pool of Assets,” and state the name and type of
entity that owns the assets in the spaces provided.

Note. An owner of a foreign trust must ensure that the trust files
an annual information return on Form 3520-A, Annual
Information Return of Foreign Trust With a U.S. Owner. For
details, see the Instructions for Form 3520-A.
To report information required under section 6038B, the
REMIC may be required to file Form 926, Return by a U.S.
Transferor of Property to a Foreign Corporation, or Form 8865,
Return of U.S. Persons With Respect to Certain Foreign
Partnerships. See the instructions for these forms for more
information.

Item F—Number of residual interest holders. Enter the
number of persons who were residual interest holders at any
time during the tax year.
Item G—Electing out of the centralized partnership audit
regime. A REMIC with only one residual interest holder at all
times during the tax year doesn't need to complete item G
because the REMIC isn't subject to the centralized partnership
audit regime. If the REMIC had more than one residual interest
holder at any time during the tax year, it may be eligible to elect
out of the centralized partnership audit regime for the tax year if
it has 100 or fewer residual interest holders in that year, each of
which is either an individual, a C corporation, a foreign entity that
would be treated as a C corporation if it was domestic, an S
corporation, or an estate of a deceased residual interest holder.
The election is made by checking the box on item G of a timely
filed Form 1066. If the REMIC makes this election, it must also
attach Schedule B-2 (Form 1065) to Form 1066 and provide all
of the information requested on the Schedule B-2 for each
residual interest holder and the shareholders of any S
corporation residual interest holders. The REMIC must notify
each residual interest holder of the election within 30 days of
making the election.
If the REMIC had more than one residual interest holder at
any time during the tax year and didn't elect out of the
centralized partnership audit regime, it must complete the
Designation of Partnership Representative on page 4 of Form
1066. For more information, see Designation of Partnership
Representative, later.

Item L—Sum of the daily accruals. Enter the total of the daily
accruals for all residual interests for the calendar year. See
section 860E(c)(2) for details.

Schedule L, Balance Sheets per Books

The amounts shown should agree with the REMIC's books and
records. Attach a statement explaining any differences.
Line 1a—Cash flow investments. These are any investments
of amounts received under qualified mortgages for a temporary
period (not more than 13 months) before distribution to holders
of interests in the REMIC.
Line 1b—Qualified reserve assets. The term “qualified
reserve asset” means any intangible property that is held for
investment and as part of a qualified reserve fund. For a
definition of qualified reserve fund, including exceptions, see
sections 860G(a)(7)(B) and (C).
Line 1c—Foreclosure property. This is any real property
(including interests in real property), and any personal property
incident to such real property, acquired by the REMIC as a result
of the REMIC's having bid in the property at foreclosure, or
having otherwise reduced the property to ownership or
possession by agreement or process of law, after there was a

Item H—Foreign financial accounts. Check the “Yes” box if
either (1) or (2) below applies to the REMIC. Otherwise, check
the “No” box.

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Instructions for Form 1066 (2022)

designate a partnership representative. The partnership
representative can be any person with a substantial presence in
the United States. The partnership representative will have the
sole authority to act on behalf of the REMIC. If an entity is
designated as partnership representative, the REMIC must also
appoint an individual to act on the entity's behalf (a designated
individual). The designated individual must also have a
substantial presence in the United States.

default or imminent default on a qualified mortgage held by the
REMIC. Generally, this property ceases to be foreclosure
property at the close of the third tax year following the tax year in
which the REMIC acquired the property. See sections 860G(a)
(8) and 856(e), and Regulations section 1.856-6 for more
details.
Note. Solely for purposes of section 860D(a), the determination
of whether any property is foreclosure property will be made
without regard to section 856(e)(4).

How to designate. An original designation of a partnership
representative must be made on the REMIC's Form 1066 filed
for each respective REMIC tax year.

Line 7—Regular interests. These are interests in the REMIC
that are issued on the startup day with fixed terms and that are
designated as regular interests, if:
1. Such interest unconditionally entitles the holder to receive
a specified principal amount or other similar amounts; and
2. Interest payments (or similar amounts), if any, with
respect to the interest at or before maturity are payable based on
a fixed rate (or at a variable rate described in Regulations
section 1.860G-1(a)(3)), or consist of a specified portion of the
interest payments on qualified mortgages and this portion
doesn't vary during the period that the interest is outstanding.

Partnership representative authority. The REMIC and all its
residual interest holders (and any other person whose tax
liability is determined in whole or in part by taking into account
directly or indirectly adjustments determined under the
centralized partnership audit regime) are bound by the actions of
the partnership representative in dealings with the IRS. A
designation for a partnership tax year remains in effect until the
designation is terminated by:
• Valid resignation of the partnership representative,
• Valid revocation of the partnership representative, or
• Determination by the IRS that the designation is not in effect.

The interest will meet the requirements of (1) even if the
timing (but not the amount) of the principal payments (or other
similar amounts) is contingent on the extent of prepayments on
qualified mortgages and the amount of income from permitted
investments.
An interest will still qualify as a regular interest even if the
specified principal amount of the regular interest (or the amount
of interest accrued on the regular interest) can be reduced as a
result of the nonoccurrence of one or more contingent payments
with respect to any reverse mortgage loan held by the REMIC if,
on the startup day for the REMIC, the sponsor reasonably
believes that all principal and interest due under the regular
interest will be paid at or prior to the liquidation of the REMIC.

Substantial presence. In order for either a partnership
representative or a designated individual to have substantial
presence in the United States, the partnership representative
(and the designated individual, if applicable) must:
• Make themselves available to meet in person with the IRS in
the United States at a reasonable time and place, as determined
by the IRS;
• Have a street address that is in the United States;
• Have a telephone number with a U.S. area code; and
• Have a U.S. taxpayer identification number.

Schedule Q, Quarterly Notice to
Residual Interest Holder of REMIC
Taxable Income or Net Loss
Allocation

Schedule M, Reconciliation of Residual Interest
Holders' Capital Accounts

Show what caused the changes in the residual interest holders'
capital accounts during the tax year.

Purpose of Schedule

The amounts shown should agree with the REMIC's books
and records and the balance sheet amounts. Attach a statement
explaining any differences.

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.

Include in column (d):
Tax-exempt interest income,
Other tax-exempt income,
Income from prohibited transactions,
Income recorded on the REMIC's books but not included on
this return, and
• Allowable deductions not charged against book income this
year.

•
•
•
•

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

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

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,
• Expenses recorded on books not deducted on this return, and
• Taxable income not recorded on the books this year.

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.

Designation of Partnership
Representative

Unless the REMIC has made a valid election out of the
centralized partnership audit regime or had only one residual
interest holder at all times during the tax year, the REMIC must
Instructions for Form 1066 (2022)

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Specific Instructions

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 4 quarters
in the calendar year must equal the amount shown on Form
1066, Section I, line 15.

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.

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.

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.

Line 2a—Sum of the daily accruals under section 860E for
all residual interests for the calendar quarter. 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.

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.

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.

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.

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.

Item F—Reconciliation of residual interest holder's capital
account. See the instructions for Schedule M, earlier.

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
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Instructions for Form 1066 (2022)

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.

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.

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

Instructions for Form 1066 (2022)

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