Base Offering Circular - Multifamily 482090 23 REMIC (either directly or through a pass-through entity) will recognize additional income with respect to such regular interest to the extent that its share of allocable investment expenses, when combined with its other miscellaneous itemized deductions for the taxable year, is less than 2% of its adjusted gross income.  Any such additional income will be treated as interest income.  In addition, Code section 68 provides that the amount of itemized deductions otherwise allowable for the taxable year for an individual whose adjusted gross income exceeds the applicable amount ($132,950, or $66,475 in the case of a separate return by a married individual within the meaning of Code section 7703 for taxable year 2001 and adjusted for inflation each year thereafter) will be reduced by the lesser of (i) 3% of the excess of adjusted gross income over the applicable amount, or (ii) 80% of the amount of itemized deductions otherwise allowable for such taxable year.  The amount of such additional taxable income recognized by Holders who are subject to the limitations of either section 67 or section 68 may be substantial and may reduce the after-tax yield to such Holders of an investment in the Securities of an affected Trust.  Where appropriate, the Offering Circular Supplement for a particular Trust will indicate that the Holders of related Securities may be required to recognize additional income as a result of the application of the limitations of either section 67 or section 68 of the Code.  Non-corporate Holders of Regular Securities evidencing an interest in a single-class REMIC also should be aware that miscellaneous itemized deductions, including allocable investment expenses attributable to such REMIC, are not deductible for purposes of the alternative minimum tax (“AMT”). Original Issue Discount Overview.  Certain Classes of Regular Securities may be issued with OID within the meaning of section 1273(a) of the Code.  In general, such OID will equal the difference between the “stated redemption price at maturity” of the Regular Security and its issue price.  Holders of Regular Securities as to which there is OID should be aware that they generally must include OID in income for federal income tax purposes on an annual basis under a constant yield accrual method that reflects compounding.  In general, OID is treated as ordinary interest income and must be included in income in advance of the receipt of the cash to which it relates. The amount of OID required to be included in a Regular Holder’s income in any taxable year will be computed in accordance with section 1272(a)(6) of the Code, which provides for the accrual of OID under a constant yield method on regular interests in a REMIC.  Under section 1272(a)(6), as elaborated by the related legislative history, the amount and the rate of accrual of OID generally is to be calculated based on the prepayment rate for the REMIC’s mortgage collateral and the reinvestment rate on amounts held pending distribution that were assumed in pricing the Regular Securities (the “Pricing Prepayment Assumptions”).  The OID Regulations do not address directly the treatment of instruments that are subject to section 1272(a)(6).  However, until the Treasury issues guidance to the contrary, the Tax Administrator, in its capacity as party responsible for computing the amount of OID to be reported to a Regular Holder each taxable year, will base its computations on Code section 1272(a)(6) and the OID Regulations as described below.  Prospective investors should be aware that because no regulatory guidance currently exists under Code section 1272(a)(6), there can be no complete assurance that the methodology described below represents the correct manner of calculating OID on the Regular Securities.