Sec. 356. Miscellaneous provisions
1,296 words·~6 min read·
/bill/113/hr/2767/ih/section-356A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
Section 106(a)(1) of the Secondary Mortgage Market Enhancement Act of 1984 ( 15 U.S.C. 77r–1(a)(1) ) is amended— in subparagraph (C), by striking or at the end; in subparagraph (D), by adding or at the end; and by inserting after subparagraph
(D)the following: covered bonds (as defined in section 352 of the United States Covered Bond Act of 2013), . Section 7701 of the Internal Revenue Code of 1986 is amended by redesignating subsection
(p)as subsection
(q)and by inserting after subsection
(o)the following new subsection: For purposes of this title— Any estate created with respect to a covered bond program— shall not be treated as an entity subject to taxation separate from the owner of the residual interest with respect to such estate; and shall be treated as a disregarded entity that is owned by the owner of such residual interest. Paragraph
(1)shall not apply with respect to an estate after the earlier of— the end of the 30-year period beginning on the date of the creation of such estate; or the end of the 180-day period beginning on the date of the final payment on the last outstanding covered bond that is secured by the cover pool held by such estate. Paragraph
(1)shall apply with respect to an estate for any period only if— at no time during such period does more than one person hold a residual interest with respect to such estate; such person is— subject to tax under subtitle A on the net income of such estate for the taxable year of such person which includes such period; or a conservator, receiver, liquidating agent, or trustee in bankruptcy with respect to the issuer for such period; and such person is not a regulated investment company (as defined in section 851) or real estate investment trust (as defined in section 856) for the taxable year which includes such period. With respect to any period for which paragraph
(1)does not apply to an estate created with respect to a covered bond program, such estate shall be treated as a corporation. No portion of any estate created with respect to a covered bond program shall be treated as a taxable mortgage pool for purposes of subsection
(i)during any period for which paragraph
(1)applies to such estate. For purposes of this subsection, the terms covered bond program , cover pool , estate , and residual interest shall each have the same respective meanings as when used for purposes of the United States Covered Bond Act of 2013 . For nonrecognition with respect to certain transfers under covered bond programs, see section 1001(f). For excise tax on estates created under covered bond programs by reason of default, see section 4475. . Section 1001 of such Code is amended by adding at the end the following new subsection: With respect to any covered bond program, none of the following shall be treated as a taxable exchange of a covered bond to a covered bond holder or to a notional principal contract counterparty: The transfer of all of the assets and liabilities of such program. The creation of an estate with respect to such program. The transfer of the residual interest in such estate. For purposes of this subsection, the terms covered bond program , estate , and residual interest shall each have the same respective meanings as when used for purposes of the United States Covered Bond Act of 2013 . . Chapter 36 of such Code is amended by inserting after subchapter B the following new subchapter: Sec. 4475. Tax on estates created under covered bond programs by reason of default. A tax is hereby imposed on the creation of an estate by operation of section 354(b)(1) of the United States Covered Bond Act of 2013 . The tax imposed under subsection
(a)with respect to the creation of any estate shall be equal to 1 percent of the principal amount of the covered bonds secured by the cover pool with respect to such estate determined as of the close of the day before the creation of such estate. The tax imposed under subsection
(a)shall be paid by the issuer of the covered bonds with respect to the covered bond program with respect to which the estate referred to in subsection
(a)is created. The tax imposed under subsection
(a)shall not reduce the assets of the cover pool and no liability for such tax shall attach to the estate or to the assets of the cover pool. If an issuer liable for the tax imposed under subsection
(a)enters conservatorship, receivership, liquidation, or bankruptcy during the 5-year period beginning on the date of the creation of the estate referred to in subsection (a), such liability shall be extinguished and any such tax paid shall refunded to the issuer immediately upon such event. For purposes of this section, the terms covered bond program , cover pool , and estate shall each have the same respective meanings as when used for purposes of the United States Covered Bond Act of 2013 . . The table of subchapters for chapter 36 of such Code is amended by inserting after the item relating to subchapter B the following new item: Subchapter C—Tax on certain estates created under covered bond programs . The amendments made by this subsection shall apply to estates created, and transfers made, after the date of the enactment of this Act. The Secretary may promulgate regulations under this subtitle that are similar to the provisions of section 346 of title 11, United States Code, including regulations to provide that— if an estate created under section 354(b)(1) or 354(c)(2) is not treated as an entity subject to taxation separate from the owner of the residual interest for purposes of the Internal Revenue Code of 1986 ( 26 U.S.C. 1 et seq. ), no separate taxable entity shall be created with respect to the estate for purposes of any State or local law imposing a tax on or measured by income; and if a transfer or assumption of an asset or liability to or by an estate or an eligible issuer under section 354(b) or 354(c) does not cause or constitute an event in which gain or loss is recognized under section 1001 of the Internal Revenue Code of 1986 ( 26 U.S.C. 1001 ), the transfer or assumption shall not cause or constitute a disposition for purposes of any provision assigning tax consequences to a disposition in connection with any State or local law imposing a tax on or measured by income. The provisions of this subtitle shall apply, notwithstanding any provision of the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.), title 11, United States Code, title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5381 et seq. ), or any other provision of Federal law with respect to conservatorship, receivership, liquidation, or bankruptcy. No provision of the Federal Deposit Insurance Act ( 12 U.S.C. 1811 et seq. ), title 11, United States Code, title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5381 et seq.), or any other provision of Federal law with respect to conservatorship, receivership, liquidation, or bankruptcy may be construed or applied in a manner that defeats or interferes with the purpose or operation of this subtitle. The covered bond regulators shall, annually— submit a joint report to the Congress describing the current state of the covered bond market in the United States; and testify on the current state of the covered bond market in the United States before the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate.
Connectionstraces to 4
1 reference not yet in our index
- 15 USC 77r–1(a)(1)
Citation graph
cites case law
Cites 5Cited by 0 across 0 sources