Base Offering Circular – Multifamily 48 REMIC will be real estate assets throughout the Trust REMIC’s life.  The amount treated as a real estate asset in the case of a Residual Security apparently is limited to the REIT’s adjusted basis in the Security. Partnerships.  Partners in a partnership that acquires a Residual Security generally must take into account their allocable share of any income, including excess inclusion income, that is produced by the Residual Security.  The partnership itself is not subject to tax on income from the Residual Security other than any excess inclusion income that is allocable to partnership interests owned by Disqualified Organizations. Foreign Residual Holders.  Residual Securities may not be transferred to a Non-U.S. Person. Banks and certain other financial institutions.  Residual Securities will be treated as qualifying real property loans and loans secured by interests in real property for DB&Ls in the same proportion that the assets of the Trust REMIC would be so treated.  However, if 95% or more of the assets of a given Trust REMIC are qualifying assets for DB&Ls, 100% of that Trust REMIC’s regular and residual interests (including Residual Securities) would be treated as qualifying assets.  In addition, the REMIC Regulations provide that payments of principal and interest on the qualified mortgages held by a Trust REMIC that are reinvested pending their distribution to the Holders of the Securities will be treated as qualifying real property loans for DB&Ls.  Moreover, multiple Trust REMICs that are part of a tiered structure will be treated as one REMIC for purposes of determining the percentage of the assets of each Trust REMIC that constitute qualifying assets for DB&L purposes.  It is expected that at least 95% of the assets of any Trust REMIC will be qualifying assets for DB&Ls throughout the Trust REMIC’s life.  The amount of a Residual Security treated as a qualifying asset for DB&Ls, however, cannot exceed the Holder’s adjusted basis in that Residual Security. Generally, gain or loss arising from the sale or exchange of Residual Securities held by certain financial institutions will give rise to ordinary income or loss, regardless of the length of the holding period for the Residual Securities.  Those financial institutions include banks, mutual savings banks, cooperative banks, domestic building and loan institutions, savings and loan institutions, and similar institutions. Disposition of Residual Securities A Residual Holder will recognize gain or loss on the disposition of his Residual Security equal to the difference between the amount of proceeds (or the fair market value of any property) received and his adjusted basis in the Residual Security.  If the Holder has held the Residual Security for more than the applicable holding period, such gain or loss generally will be characterized as long-term capital gain or loss.  In the case of banks, Thrift Institutions, and certain other financial institutions, however, gain or loss on the disposition of a Residual Security will be treated as ordinary gain or loss, regardless of the length of the holding period.  See “— Gain or Loss on Disposition” and “—Limitations on Offset or Exemption of REMIC Income— Special Considerations for Certain Types of Investors.”