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The terms of each GMC series obligated petitioner to pay
interest at a rate stated on the face of its prospectus and to
repay the face amount of the certificate to the holder.
Principal payments were made annually. GMC holders received
principal repayments in amounts equal to the greater of (1)
minimum scheduled payments, or (2) monthly and other payments of
principal petitioner received on the mortgages serving as
collateral. Petitioner was unconditionally required to make
annual principal payments to the GMC holders in an amount at
least equal to the minimum levels specified, regardless of the
amounts of principal received from the underlying mortgages. If
mortgages that served as collateral paid down the principal
amount faster than implied by the schedules of minimum payments,
GMC holders received payments of principal at a faster rate than
required by the schedule of minimum payments. GMCs holders had
the option to require petitioner to purchase their certificates
7(...continued)
interests in the Mortgages, the terms of the
Certificates are such that for Federal income tax
purposes * * * [petitioner] will not be selling
undivided interests in the Mortgages but will be
issuing debt obligations for which the Mortgages held
by the Trustee are security. * * *
On May 13, 1983, respondent revoked this private letter ruling
and related rulings. See Priv. Ltr. Rul. 8337016 (May 23, 1983).
Respondent does not presently regard GMCs as debt for tax
purposes; however, under the provisions of sec. 7805(b),
respondent has permitted petitioner to treat its GMCs issued
before May 23, 1983, including all of the GMCs at issue in this
case, as debt for tax purposes.
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