[Code of Federal Regulations]
[Title 26, Volume 9]
[Revised as of April 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.860C-1]

[Page 95]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1--INCOME TAXES--Table of Contents
 
Sec. 1.860C-1  Taxation of holders of residual interests.

    (a) Pass-thru of income or loss. Any holder of a residual interest 
in a REMIC must take into account the holder's daily portion of the 
taxable income or net loss of the REMIC for each day during the taxable 
year on which the holder owned the residual interest.
    (b) Adjustments to basis of residual interests--(1) Increase in 
basis. A holder's basis in a residual interest is increased by--
    (i) The daily portions of taxable income taken into account by that 
holder under section 860C(a) with respect to that interest; and
    (ii) The amount of any contribution described in section 860G(d)(2) 
made by that holder.
    (2) Decrease in basis. A holder's basis in a residual interest is 
reduced (but not below zero) by--
    (i) First, the amount of any cash or the fair market value of any 
property distributed to that holder with respect to that interest; and
    (ii) Second, the daily portions of net loss of the REMIC taken into 
account under section 860C(a) by that holder with respect to that 
interest.
    (3) Adjustments made before disposition. If any person disposes of a 
residual interest, the adjustments to basis prescribed in paragraph (b) 
(1) and (2) of this section are deemed to occur immediately before the 
disposition.
    (c) Counting conventions. For purposes of determining the daily 
portion of REMIC taxable income or net loss under section 860C(a)(2), 
any reasonable convention may be used. An example of a reasonable 
convention is ``30 days per month/90 days per quarter/360 days per 
year.''

[T.D. 8458, 57 FR 61301, Dec. 24, 1992]

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