[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4539 Introduced in House (IH)]

111th CONGRESS
  2d Session
                                H. R. 4539

 To amend the Internal Revenue Code of 1986 to modify the treatment of 
   foreign investments in United States real property, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 27, 2010

  Mr. Crowley (for himself, Ms. Bean, and Mr. Tiberi) introduced the 
 following bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to modify the treatment of 
   foreign investments in United States real property, 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 Revitalization Act of 
2010''.

SEC. 2. TREATMENT OF FOREIGN INVESTMENTS IN UNITED STATES REAL 
              PROPERTY.

    (a) Interest in Domestic Corporation Not a United States Real 
Property Interest.--Subsection (c) of section 897 of the Internal 
Revenue Code of 1986 is amended to read as follows:
    ``(c) United States Real Property Interest.--For purposes of this 
section--
            ``(1) In general.--The term `United States real property 
        interest' means an interest in real property (including an 
        interest in a mine, well, or other natural deposit) located in 
        the United States or the Virgin Islands.
            ``(2) Other special rules.--
                    ``(A) Interest in real property.--The term 
                `interest in real property' includes fee ownership and 
                co-ownership of land or improvements thereon, 
                leaseholds of land or improvements thereon, options to 
                acquire land or improvements thereon, and options to 
                acquire leaseholds of land or improvements thereon.
                    ``(B) Real property includes associated personal 
                property.--The term `real property' includes movable 
                walls, furnishings, and other personal property 
                associated with the use of the real property.''.
    (b) Rules for Certain Investment Entities.--Section 897(h) of such 
Code is amended to read as follows:
    ``(h) Special Rules for Certain Investment Entities.--For purposes 
of this section--
            ``(1) Look-through of distributions.--Any distribution by a 
        qualified investment entity to a nonresident alien individual 
        or a foreign corporation shall, to the extent attributable to 
        gain from sales or exchanges by the qualified investment entity 
        (including as a result of sales or exchanges by a lower-tier 
        qualified investment entity) of United States real property 
        interests, be included in such foreign person's gross income as 
        an ordinary dividend from the qualified investment entity.
            ``(2) Liquidating distributions.--In the event of a 
        liquidating distribution, the lesser of--
                    ``(A) gain recognized under section 331, or
                    ``(B) the amount that would be treated as an 
                ordinary dividend pursuant to paragraph (1),
        shall be treated as an ordinary dividend.
            ``(3) Partnerships.--For purposes of this paragraph, a 
        qualified investment entity shall be deemed to own its 
        proportionate share of each of the assets of any partnership 
        (as defined in section 7701(a)(2)) in which the qualified 
        investment entity has an interest as a partner.
            ``(4) Qualified investment entity.--The term `qualified 
        investment entity' means any real estate investment trust and 
        any regulated investment company.''.
    (c) Repeal of the Election by a Foreign Corporation To Be Treated 
as a Domestic Corporation.--Section 897 of such Code is amended by 
striking subsection (i).
    (d) Conforming Amendments.--
            (1) Section 852(b)(3)(E) of such Code is amended by 
        striking ``to which section 897 does not apply by reason of the 
        second sentence of section 897(h)(1)'' and inserting 
        ``described in section 897(h)(1)''.
            (2) Section 857(b)(3)(F) of such Code is amended by 
        striking ``In the case of a shareholder of a real estate 
        investment trust to whom section 897 does not apply by reason 
        of the second sentence of section 897(h)(1)'' and inserting 
        ``In the case of a distribution described in section 897(h)(1) 
        to a shareholder of a real estate investment trust''.
            (3) Section 871(k)(2)(E) of such Code is amended by 
        striking ``to which section 897 does not apply by reason of the 
        second sentence of section 897(h)(1)'' and inserting 
        ``described in section 897(h)(1)''.
            (4) Section 884(d)(2) of such Code is amended by striking 
        subparagraph (C) and redesignating subparagraphs (D) and (E) as 
        subparagraphs (C) and (D), respectively.
            (5)(A) Section 1445(b) of such Code is amended by striking 
        paragraphs (3), (6), and (8) and by redesignating paragraphs 
        (4), (5), (7), and (9) as paragraphs (3), (4), (5), and (6), 
        respectively.
            (B) Section 1445(d)(1)(A) of such Code is amended by 
        striking ``or a domestic corporation furnishes the transferee 
        an affidavit described in paragraph (3) of subsection (b)''.
            (C) Section 1445(e) of such Code is amended by striking 
        paragraphs (3) and (6) and by redesignating paragraphs (4), 
        (5), and (7) as paragraphs (3), (4), and (5), respectively.
            (6) Paragraphs (1) and (2) of section 6039C(d) of such Code 
        are amended to read as follows:
            ``(1) to the United States, in the case of any interest in 
        real property located in the United States, and
            ``(2) to the Virgin Islands, in the case of any interest in 
        real property located in the Virgin Islands.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2009.
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