At least two law firms last week provided summary comments to their clients on the new Internal Revenue Service proposed regulations for treatment of inducement fees paid to holders of the non-economic residual interest in real estate mortgage investment conduits (REMICs).

The holder of the residual interest is paid the inducement fee to offset the tax liability of its ownership, which exceeds any REMIC-related revenue tied to the residual, especially in the early phases of the conduit.

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