118 STAT. 1594 PUBLIC LAW 108–357—OCT. 22, 2004 ‘‘(III) is purchased by the REMIC pursuant to a fixed price contract in effect on the startup day.’’. (B) Section 860G(a)(7)(B) is amended to read as follows: ‘‘(B) QUALIFIED RESERVE FUND.—For purposes of subparagraph (A), the term ‘qualified reserve fund’ means any reasonably required reserve to— ‘‘(i) provide for full payment of expenses of the REMIC or amounts due on regular interests in the event of defaults on qualified mortgages or lower than expected returns on cash flow investments, or ‘‘(ii) provide a source of funds for the purchase of obligations described in clause (ii) or (iii) of para graph (3)(A). The aggregate fair market value of the assets held in any such reserve shall not exceed 50 percent of the aggre gate fair market value of all of the assets of the REMIC on the startup day, and the amount of any such reserve shall be promptly and appropriately reduced to the extent the amount held in such reserve is no longer reasonably required for purposes specified in clause (i) or (ii) of this subparagraph.’’. (9) Subparagraph (C) of section 1202(e)(4) is amended by striking ‘‘REMIC, or FASIT’’ and inserting ‘‘or REMIC’’. (10) Clause (xi) of section 7701(a)(19)(C) is amended— (A) by striking ‘‘and any regular interest in a FASIT,’’, and (B) by striking ‘‘or FASIT’’ each place it appears. (11) Subparagraph (A) of section 7701(i)(2) is amended by striking ‘‘or a FASIT’’. (12) The table of parts for subchapter M of chapter 1 is amended by striking the item relating to part V. (c) EFFECTIVE DATE.— (1) IN GENERAL.—Except as provided in paragraph (2), the amendments made by this section shall take effect on January 1, 2005. (2) EXCEPTION FOR EXISTING FASITS.—Paragraph (1) shall not apply to any FASIT in existence on the date of the enact ment of this Act to the extent that regular interests issued by the FASIT before such date continue to remain outstanding in accordance with the original terms of issuance. SEC. 836. LIMITATION ON TRANSFER OR IMPORTATION OF BUILT IN LOSSES. (a) IN GENERAL.—Section 362 (relating to basis to corporations) is amended by adding at the end the following new subsection: ‘‘(e) LIMITATIONS ON BUILT IN LOSSES.— ‘‘(1) LIMITATION ON IMPORTATION OF BUILT IN LOSSES.— ‘‘(A) IN GENERAL.—If in any transaction described in subsection (a) or (b) there would (but for this subsection) be an importation of a net built in loss, the basis of each property described in subparagraph (B) which is acquired in such transaction shall (notwithstanding subsections (a) and (b)) be its fair market value immediately after such transaction. ‘‘(B) PROPERTY DESCRIBED.—For purposes of subpara graph (A), property is described in this subparagraph if— 26 USC 56 note.
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