Base Offering Circular – Multifamily 46 Disqualified Organization and the pass-through entity does not have actual knowledge that such affidavit is false. If an “electing large partnership” holds a Residual Security, all interests in the electing large partnership are treated as held by disqualified organizations for purposes of the tax imposed upon a pass-through entity by section 860E(e) of the Code.  An exception to this tax, otherwise available to a pass-through entity that is furnished certain affidavits by record holders of interests in the entity and that does not know such affidavits are false, is not available to an electing large partnership. The Code and the REMIC Regulations also require that reasonable arrangements be made with respect to each REMIC to enable the REMIC to provide the Treasury and the transferor with information necessary for the application of the one-time tax described above.   Consequently, the applicable Trust Agreement will provide for the Tax Administrator to perform such information services as may be required for the application of the one-time tax.  If a Residual Holder transfers an interest in a Residual Security in violation of the relevant transfer restrictions and triggers the information requirement, the Tax Administrator may charge such Residual Holder a reasonable fee for providing the information. Special Considerations for Certain Types of Investors Dealers in Securities.  Residual Holders that are dealers in securities should be aware that the Service has issued final regulations (the “Mark to Market Regulations”) under section 475 of the Code relating to the requirement that a securities dealer mark to market securities held for sale to customers.  This mark-to-market requirement applies to all securities of a dealer, except to the extent that the dealer has specifically identified a security as held for investment.  The Mark to Market Regulations provide that, for purposes of this mark-to-market requirement, a Residual Security is not treated as a security and thus may not be marked to market.  The Mark to Market Regulations apply to all Residual Securities acquired on or after January 4, 1995. Tax-exempt entities.  Any excess inclusion income with respect to a Residual Security held by a tax-exempt entity, including a qualified profit-sharing, pension, or other employee benefit plan, will be treated as UBTI.  Although the legislative history and statutory provisions imply otherwise, the Treasury conceivably could take the position that, under pre-existing Code provisions, substantially all income on a Residual Security (including non-excess inclusion income) is to be treated as UBTI.  See “—Tax Treatment of Residual Securities—Taxation of Residual Holders.” Individuals and Pass-Through Entities.  A Residual Holder who is an individual, trust, or estate will be able to deduct its allocable share of the fees or expenses relating to servicing the assets assigned to a Trust REMIC or administering the Trust REMIC under section 212 of the Code only to the extent that the amount of such fee, when combined with its other miscellaneous itemized deductions for the taxable year, exceeds 2% of its adjusted gross income.  That same limitation will apply to individuals, trusts, or estates that hold Residual Securities indirectly through a grantor trust, a partnership, an S corporation, a common trust fund, or a nonpublicly offered RIC.  A nonpublicly offered RIC is a RIC other than one whose shares are (i) continuously offered pursuant to a public offering, (ii) regularly traded on an established