2023

Instructions for Form 1066

U.S. Real Estate Mortgage Investment Conduit

(REMIC) Income Tax Return

Department of the Treasury

Internal Revenue Service

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 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 $485. The penalty under section 

6698 that the IRS may charge when no tax is due has 

increased to $235 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.

Total assets at end of the tax year. If there are no 

assets at the end of the year enter -0-.

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 (PR). Under the centralized 

partnership audit regime, a REMIC is required to 

designate a PR 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 PR 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 PR must have a 

substantial presence in the United States. For more 

information, see Designation of Partnership 

Representative, later.

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missing children selected by the Center may appear in 

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can help bring these children home by looking at the 

photographs and calling 1-800-THE-LOST 

(1-800-843-5678) if you recognize a child.

How To Get Forms and Publications

Internet. You can access the IRS website at IRS.gov 24 

hours a day, 7 days a week to:

• Download forms, including talking tax forms, 

instructions, and publications;

• Use the online Internal Revenue Code, regulations, or 

other official guidance;

• Get information on starting and operating a small 

business;

• 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.

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.

Sep 21, 2023 Cat. No. 64231R
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.

Termination of Election

If the entity ceased to qualify as a REMIC under the 

requirements of section 860D(a) in 2023, the election to 

be a REMIC is terminated for 2023 and all future years. 

For 2023 and all future years, you must file the tax form for 

similarly organized entities (corporations, partnerships, 

trusts, etc.).

When To File

Generally, REMICs must file the 2023 Form 1066 by 

March 15, 2024. However, if the entity will file its final 

return in 2023, Form 1066 is due by the 15th day of the 

3rd month following the date the REMIC ceased to exist.

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.

Period Covered

File the 2023 return for:

1. Calendar year 2023;

2. Short tax years beginning and ending in 2023; or

3. Short tax years beginning and ending in 2024, if the 

2024 Form 1066 isn't available by the time the REMIC is 

required to file its 2024 return. Even though the REMIC is 

filing the 2024 tax return on a 2023 Form 1066, any tax 

law changes effective after December 31, 2023, have to 

be applied on the tax return.

In the case of (2) or (3) above, fill in the dates for 

the short tax year at the top of the form.

CAUTION

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CAUTION

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Private Delivery Services (PDSs)

REMICs can use certain 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.

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

mailing date.

For the IRS mailing address to use if you’re using a 

PDS, go to IRS.gov/PDSstreetAddresses.

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.

Where To File

If the REMIC's principal business, office, or agency is 

located in the United States, then file the return at:

Department of the Treasury

Internal Revenue Service

Ogden, UT 84201-0007

If the REMIC's principal business, office, or agency is 

located in a foreign country or U.S. possession, then file 

the return at:

Internal Revenue Service

P.O. Box 409101

Ogden, UT 84409

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.

Rounding Off to Whole Dollars

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).

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.

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.

Final Return

If the REMIC ceases to exist during the year, check the 

box on Form 1066, page 1, item D(1).

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.

CAUTION

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-2- Instructions for Form 1066 (2023)
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.

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.

Assembling the Return

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.

You must complete every applicable entry space on 

Form 1066. If you attach statements, don’t enter “See 

Attached” instead of completing the entry spaces on this 

form.

Other Forms and Returns That May 

Be Required

Form 1096, Annual Summary and Transmittal of U.S. 

Information Returns. Use this form to summarize and 

send information returns to the IRS.

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.

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 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.

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. 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.

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

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.

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.

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 institution to make a same-day wire payment, go 

to IRS.gov/SameDayWire.

Instructions for Form 1066 (2023) -3-
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, $485 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 

$235 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.

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.

Contributions to the REMIC

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.

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 residual 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)).

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 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)).

Payments Subject to Withholding at 

Source

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.

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.

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

If the REMIC wants to allow the IRS to discuss its 2023 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.

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:

-4- Instructions for Form 1066 (2023)
• Give the IRS any information that is missing from the 

return;

• Call the IRS for information about the processing of the 

return 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.

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.

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 2024 

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.

Specific Instructions

General Information

Name, address, and EIN. Enter 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.

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.

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.

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 zero.

Section I

Income—(Lines 1 Through 6)

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.

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).

Line 4—Ordinary gain or (loss). Enter the net gain or 

(loss) from Form 4797, Sales of Business Property, Part II.

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 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.

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 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 

Instructions for Form 1066 (2023) -5-
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 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.

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.

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 2023, 

claims a section 179 expense deduction, or claims 

depreciation on any car or other listed property.

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.

Schedule J

Part I—Tax on Net Income From Prohibited 

Transactions

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.

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 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 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.

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 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 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.

-6- Instructions for Form 1066 (2023)
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.

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.

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 H—Foreign financial accounts. Check the “Yes” 

box if either (1) or (2) below applies to the REMIC. 

Otherwise, check the “No” box.

1. At any time during the 2023 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.

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.

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 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 

Instructions for Form 1066 (2023) -7-
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 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).

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.

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.

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.

The amounts shown should agree with the REMIC's 

books and records and the balance sheet amounts. 

Attach a statement explaining any differences.

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.

Include in column (e):

• Capital losses over the $3,000 limitation (for a REMIC 

with a 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.

Designation of Partnership 

Representative (PR)

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 designate a PR. The PR can be any person 

with a substantial presence in the United States. The PR 

will have the sole authority to act on behalf of the REMIC. 

If an entity is designated as PR, the REMIC must also 

appoint an individual to act on the entity's behalf (a 

designated individual (DI)). The DI must also have a 

substantial presence in the United States.

How to designate. An original designation of a PR must 

be made on the REMIC's Form 1066 filed for each 

respective REMIC tax year.

PR 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 PR 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 PR,

• Valid revocation of the PR, or

• Determination by the IRS that the designation isn’t in 

effect.

Substantial presence. In order for either a PR or a DI to 

have substantial presence in the United States, they 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.

-8- Instructions for Form 1066 (2023)
Schedule Q, Quarterly Notice to 

Residual Interest Holder of REMIC 

Taxable Income or Net Loss 

Allocation

Purpose of Schedule

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.

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.

Note. Schedule Q (Form 1066) is a separate tax form that 

isn't part of Form 1066.

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.

Specific Instructions

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.

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.

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.

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.

Item F—Reconciliation of Residual Interest 

Holder's Capital Account

See the instructions for Schedule M, earlier.

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 four quarters in the calendar year must equal 

the amount shown on Form 1066, Section I, line 15.

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 

Instructions for Form 1066 (2023) -9-
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.

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.

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.

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.

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 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.

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 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.

-10- Instructions for Form 1066 (2023)