Question \#1 of 15 A real estate mortgage investment conduit (REMIC) is a tax device that allows cash flows from an underlying pool of stocks to be passed through to security holders witho being subject to income taxes at the level of the trustee or agent. True False

**Step 1. Definition of REMIC** A real estate mortgage investment conduit (REMIC) is a special tax vehicle created to hold a pool of mortgages (or mortgage-backed assets) and to issue different classes of securities to investors. One of its key features is that it is not subject to federal income tax at the level of the REMIC provided it meets certain regulatory requirements. Instead, the cash flows—such as interest and principal payments—are passed through to the security holders. **Step 2. Analysis of the Statement** The statement provided is: \( \text{"A real estate mortgage investment conduit (REMIC) is a tax device that allows cash flows from an underlying pool of stocks to be passed through to security holders without being subject to income taxes at the level of the trustee or agent."} \) While REMICs indeed pass through cash flows without being subject to income taxes at the vehicle level, the underlying pool is generally composed of mortgage loans (or related assets), not stocks. Despite this slight misstatement regarding the nature of the underlying assets, the central characteristic described — pass-through taxation — is correct. **Step 3. Conclusion** Given that the essential feature described (the pass-through of cash flows without tax at the conduit level) is accurate, the statement is considered **True** in its intent, even though it inappropriately mentions "stocks" instead of "mortgages." **Answer:** True