[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 1181 Introduced in Senate (IS)]
113th CONGRESS
1st Session
S. 1181
To amend the Internal Revenue Code of 1986 to exempt certain stock of
real estate investment trusts from the tax on foreign investments in
United States real property interests, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 18, 2013
Mr. Menendez (for himself, Mr. Enzi, Mr. Schumer, Mr. Barrasso, Mr.
Begich, Mr. Boozman, Mr. Bennet, Mr. Cornyn, Mrs. Boxer, Mr. Crapo, Ms.
Cantwell, Mr. Isakson, Mr. Cardin, Mr. Roberts, Mr. Carper, Mr. Thune,
Mr. Coons, Mrs. Gillibrand, Mrs. Hagan, Mr. Nelson, Mrs. Shaheen, Ms.
Stabenow, Mr. Tester, and Mr. Wyden) introduced the following bill;
which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to exempt certain stock of
real estate investment trusts from the tax on foreign investments in
United States real property interests, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Real Estate Investment and Jobs Act
of 2013''.
SEC. 2. EXCEPTION FROM FIRPTA FOR CERTAIN STOCK OF REAL ESTATE
INVESTMENT TRUSTS.
(a) In General.--Paragraph (3) of section 897(c) of the Internal
Revenue Code of 1986 is amended--
(1) by striking all that precedes ``If any class'' and
inserting the following:
``(3) Exceptions for certain stock.--
``(A) Exception for stock regularly traded on
established securities markets.--'',
(2) by inserting before the period the following: ``. In
the case of any class of stock of a real estate investment
trust, the preceding sentence shall be applied by substituting
`10 percent' for `5 percent''', and
(3) by adding at the end the following new subparagraph:
``(B) Exception for certain stock in real estate
investment trusts.--
``(i) In general.--Stock of a real estate
investment trust held by a qualified
shareholder shall not be treated as a United
States real property interest except to the
extent that an investor in the qualified
shareholder (other than an investor that is a
qualified shareholder) holds (directly or
indirectly through the qualified shareholder)
more than 10 percent of the stock of such real
estate investment trust.
``(ii) Qualified shareholder.--For purposes
of this subparagraph, the term `qualified
shareholder' means an entity--
``(I) that is eligible for benefits
of a comprehensive income tax treaty
with the United States which includes
an exchange of information program,
``(II) that is a qualified
collective investment vehicle,
``(III) whose principal class of
interests is listed and regularly
traded on one or more recognized stock
exchanges (as defined in such
comprehensive income tax treaty), and
``(IV) that maintains records on
the identity of each person who, at any
time during the qualified shareholder's
taxable year, is the direct owner of
more than 10 percent of the class of
interest described in clause (III).
``(iii) Qualified collective investment
vehicle.--For purposes of this subparagraph,
the term `qualified collective investment
vehicle' means an entity that--
``(I) would be eligible for a
reduced rate of withholding under such
comprehensive income tax treaty with
respect to ordinary dividends paid by a
real estate investment trust, even if
such entity holds more than 10 percent
of the stock of such real estate
investment trust,
``(II) would be classified as a
United States real property holding
corporation (determined without regard
to this paragraph) at any time during
the 5-year period ending on the date of
disposition of or distribution with
respect to the entity's interests in a
real estate investment trust, or
``(III) is designated as such by
the Secretary and is either--
``(aa) fiscally transparent
within the meaning of section
894, or
``(bb) required to include
dividends in its gross income,
but is entitled to a deduction
for distributions to its
investors.''.
(b) Distributions by Real Estate Investment Trusts.--Paragraph (1)
of section 897(h) of the Internal Revenue Code of 1986 is amended--
(1) by striking ``Any distribution'' and inserting the
following:
``(A) In general.--Except as provided in
subparagraph (B), any distribution'',
(2) by inserting ``(10 percent in the case of stock of a
real estate investment trust)'' after ``5 percent of such class
of stock'',
(3) by inserting ``, and any distribution to a qualified
shareholder (as defined in subsection (c)(3)(B)(ii)) shall not
be treated as gain recognized from the sale or exchange of a
United States real property interest to the extent that the
stock of the real estate investment trust held by such
qualified shareholder is not treated as a United States real
property interest under subsection (c)(3)(B)'' before the
period at the end of the second sentence, and
(4) by adding at the end the following new subparagraph:
``(B) Special rule.--Subparagraph (A) shall not
apply to distributions which are treated as a sale or
exchange of stock or property pursuant to section
301(c)(3), 302, or 331.''.
(c) Definition.--Paragraph (4) of section 897(h) of the Internal
Revenue Code of 1986 is amended by adding at the end of subparagraph
(B) the following: ``In determining whether a qualified investment
entity is domestically controlled, any stock in the qualified
investment entity held by another qualified investment entity shall be
treated as held by a foreign person unless such other qualified
investment entity is domestically controlled. In making such a
determination, a qualified investment entity shall be permitted to
presume that stock held by a holder of less than 5 percent of a class
of stock regularly traded on an established securities market in the
United States is held by United States persons throughout the testing
period except to the extent that the qualified investment entity has
actual knowledge regarding stock ownership.''.
(d) Conforming Amendment.--Subparagraph (C) of section 897(c)(6) of
the Internal Revenue Code of 1986 is amended--
(1) by striking ``more than 5 percent'' and inserting
``more than 5 or 10 percent, whichever is applicable,'', and
(2) by striking ``substituting `5 percent' for `50
percent')'' and inserting ``substituting `5 percent or 10
percent, whichever is applicable' for `50 percent')''.
(e) Effective Dates.--
(1) In general.--The amendments made by subsection (a)
shall apply to dispositions on and after the date of the
enactment of this Act.
(2) Distributions.--The amendments made by subsection (b)
shall apply to any distribution by a real estate investment
trust on or after the date of the enactment of this Act which
is treated as a deduction for a taxable year of such trust
ending after such date.
(3) Definitions.--The amendments made by subsections (c)
and (d) shall take effect on the date of the enactment of this
Act.
SEC. 3. UNITED STATES REAL PROPERTY INTEREST.
(a) United States Real Property Interest.--Subparagraph (B) of
section 897(c)(1) of the Internal Revenue Code of 1986 is amended by
striking all that precedes ``(i) as of the date of the disposition''
and inserting the following:
``(B) Exclusion for interest in certain
corporations.--The term `United States real property
interest' does not include any interest in a
corporation (other than a qualified investment entity
(as defined in subsection (h)(4)(A)(i))) if--''.
(b) Effective Date.--The amendment made by this section shall take
effect on the date of the enactment of this Act.
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