Base Offering Circular - Multifamily 482090 44 regarding excess inclusion income will apply to a Residual Holder that is a RIC, common trust fund, or one of certain corporations doing business as a cooperative. A Residual Security held by a REIT will be treated as a real estate asset for purposes of the REIT qualification requirements in the same proportion that the Trust REMIC’s assets would be treated as real estate assets if held directly by the REIT, and interest income derived from such Residual Security will be treated as qualifying interest income for REIT purposes (“Qualifying REIT Interest”) to the same extent.  If 95% or more of a Trust REMIC’s assets qualify as real estate assets for REIT purposes, 100% of that Trust REMIC’s regular and residual interests (including Residual Securities) will be treated as real estate assets for REIT purposes, and all of the income derived from such interests will be treated as Qualifying REIT Interest.  The REMIC Regulations provide that payments of principal and interest on the qualified mortgages held by a Trust REMIC that are reinvested pending distribution to the Holders of the related REMIC’s Securities constitute real estate assets for REIT purposes.  Multiple Trust REMICs that are part of a tiered structure (as in the case of a Double REMIC Series) will be treated as one REMIC for purposes of determining the percentage of the assets of each Trust REMIC that constitutes real estate assets.  It is expected that at least 95% of the assets of a Trust 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