Par. 3. Section 1.1275-2 is amended by adding new paragraphs (l) and (m) to read as follows:
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(l) [Reserved].
(m) Special rules for certain REMIC regular interests —(1) Scope. If the terms of a REMIC regular interest (as defined in section 860G(a)(1)) provide for a delay between its record dates and the associated payment dates, the initial accrual period and final accrual period for that regular interest are determined under this paragraph (m). Except as provided in paragraph (m)(7) of this section, this paragraph (m) does not apply to a REMIC regular interest if the record dates and the payment dates are separated by more than thirty-one days.
(2) General rules —(i) Initial accrual period. The initial accrual period for a REMIC regular interest subject to this paragraph (m) begins on issuance of the REMIC regular interest.
(ii) Final accrual period. The final accrual period for a REMIC regular interest subject to this paragraph (m) ends on the final record date of the REMIC regular interest.
(3) Special rule for calculation of OID in final accrual period. In applying section 1272(a)(6)(A) to calculate OID in the final accrual period for a REMIC regular interest subject to this paragraph (m), payments after the end of the final accrual period of amounts included in the stated redemption price at maturity are treated as payments during the final accrual period.
(4) Definition of record date. For purposes of this paragraph (m), a record date of a REMIC regular interest is a date, provided by the terms of the REMIC regular interest, on which the holder becomes entitled to a payment (of interest or principal) that is to be made on a subsequent payment date.
(5) Accrual of qualified stated interest. See § 1.446-2 for the accrual of qualified stated interest.
(6) Example. The following example illustrates the application of this paragraph (m).
Example.
REMIC X issues regular interests on January 1, 2009. The terms of the regular interests provide for payments of interest and principal to the persons who hold the regular interests on the last day of the calendar month (the record date). Each such payment is to be made on the fifteenth day of the succeeding calendar month (the payment date). The last payment with respect to the regular interests issued by REMIC X is to be made on January 15, 2014, to persons who hold the regular interests on December 31, 2013. Under this paragraph (m), the initial accrual period begins on the date of issuance, January 1, 2009, and the last accrual period ends on the last record date, December 31, 2013.
(7) Treatment of REMIC regular interests if the record dates and the payment dates are separated by more than thirty-one days. [Reserved]
(8) Effective date —(i) In general. This paragraph (m) applies to REMIC regular interests issued after the date the final regulations are published in the Federal Register .
(ii) Automatic consent to change method of accounting. Taxpayers are hereby granted the Commissioner's consent under section 446(e) to change their method of accounting for REMIC regular interests to which this paragraph (m) applies if—
(A) The change involves changing accrual periods to accrual periods allowed by this paragraph (m);
(B) The change is made for the first taxable year of the taxpayer during which the taxpayer holds a REMIC regular interest to which the rules of this paragraph (m) apply; and
(C) The change in method of accounting is effected on a cut-off basis.