
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC860H]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
Subchapter M--Regulated Investment Companies and Real Estate Investment 
                                 Trusts
 
        PART V--FINANCIAL ASSET SECURITIZATION INVESTMENT TRUSTS
 
Sec. 860H. Taxation of a FASIT; other general rules


(a) Taxation of FASIT

    A FASIT as such shall not be subject to taxation under this subtitle 
(and shall not be treated as a trust, partnership, corporation, or 
taxable mortgage pool).

(b) Taxation of holder of ownership interest

    In determining the taxable income of the holder of the ownership 
interest in a FASIT--
        (1) all assets, liabilities, and items of income, gain, 
    deduction, loss, and credit of a FASIT shall be treated as assets, 
    liabilities, and such items (as the case may be) of such holder,
        (2) the constant yield method (including the rules of section 
    1272(a)(6)) shall be applied under an accrual method of accounting 
    in determining all interest, acquisition discount, original issue 
    discount, and market discount and all premium deductions or 
    adjustments with respect to each debt instrument of the FASIT,
        (3) there shall not be taken into account any item of income, 
    gain, or deduction allocable to a prohibited transaction, and
        (4) interest accrued by the FASIT which is exempt from tax 
    imposed by this subtitle shall, when taken into account by such 
    holder, be treated as ordinary income.

(c) Treatment of regular interests

    For purposes of this title--
        (1) a regular interest in a FASIT, if not otherwise a debt 
    instrument, shall be treated as a debt instrument,
        (2) section 163(e)(5) shall not apply to such an interest, and
        (3) amounts includible in gross income with respect to such an 
    interest shall be determined under an accrual method of accounting.

(Added Pub. L. 104-188, title I, Sec. 1621(a), Aug. 20, 1996, 110 Stat. 
1858.)


                             Effective Date

    Part effective Sept. 1, 1997, see section 1621(d) of Pub. L. 104-
188, set out as an Effective Date of 1996 Amendment note under section 
26 of this title.
