[Code of Federal Regulations]
[Title 26, Volume 18]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR301.7701(i)-3]

[Page 679-680]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 301_PROCEDURE AND ADMINISTRATION--Table of Contents
 
                               Definitions
 
Sec. 301.7701(i)-3  Effective dates and duration of taxable mortgage pool 
classification.

    (a) Effective dates. Except as otherwise provided, the regulations 
under section 7701(i) are effective and applicable September 6, 1995.
    (b) Entities in existence on December 31, 1991--(1) In general. For 
transitional rules concerning the application of section 7701(i) to 
entities in existence on December 31, 1991, see section 675(c) of the 
Tax Reform Act of 1986.

[[Page 680]]

    (2) Special rule for certain transfers. A transfer made to an entity 
on or after September 6, 1995, is a substantial transfer for purposes of 
section 675(c)(2) of the Tax Reform Act of 1986 only if--
    (i) The transfer is significant in amount; and
    (ii) The transfer is connected to the entity's issuance of related 
debt obligations (as defined in paragraph (b)(3) of this section) that 
have different maturities (within the meaning of Sec. 301.7701-1(e)).
    (3) Related debt obligation. A related debt obligation is a debt 
obligation whose payments bear a relationship (within the meaning of 
Sec. 301.7701-1(f)) to payments on debt obligations that the entity 
holds as assets.
    (4) Example. The following example illustrates the principles of 
this paragraph (b):

    Example. On December 31, 1991, Partnership Q holds a pool of real 
estate mortgages that it acquired through retail sales of single family 
homes. Partnership Q raises $10,000,000 on October 25, 1996, by using 
this pool to issue related debt obligations with multiple maturities. 
The transfer of the $10,000,000 to Partnership Q is a substantial 
transfer (within the meaning of Sec. 301.7701(i)-3(b)(2)).

    (c) Duration of taxable mortgage pool classification--(1) 
Commencement and duration. An entity is classified as a taxable mortgage 
pool on the first testing day that it meets the definition of a taxable 
mortgage pool. Once an entity is classified as a taxable mortgage pool, 
that classification continues through the day the entity retires its 
last related debt obligation.
    (2) Testing day defined. A testing day is any day on or after 
September 6, 1995, on which an entity issues a related debt obligation 
(as defined in paragraph (b)(3) of this section) that is significant in 
amount.

[T.D. 8610, 60 FR 40092, Aug. 7, 1995]