[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2989 Introduced in House (IH)]

112th CONGRESS
  1st Session
                                H. R. 2989

 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 HOUSE OF REPRESENTATIVES

                           September 21, 2011

   Mr. Brady of Texas (for himself, Mr. Crowley, Mr. Tiberi, and Ms. 
   Berkley) 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 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 Jobs and Investment Act 
of 2011''.

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 to read as follows:
            ``(3) Exceptions for certain stock dispositions.--
                    ``(A) Stock regularly traded on established 
                securities markets.--If any class of stock of a 
                corporation is regularly traded on an established 
                securities market, stock of such class shall be treated 
                as a United States real property interest only in the 
                case of a person who, at some time during the shorter 
                of the periods described in paragraph (1)(A)(ii), held 
                more than 5 percent of such class of stock. 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'.
                    ``(B) 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 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 a shareholder--
                                    ``(I) which would be eligible for a 
                                reduced rate of withholding under any 
                                income tax treaty of the United States 
                                with respect to ordinary dividends paid 
                                by a real estate investment trust even 
                                if such shareholder holds more than 10 
                                percent of the stock of such real 
                                estate investment trust, and
                                    ``(II) whose principal class of 
                                interests is listed and regularly 
                                traded on one or more recognized stock 
                                exchanges (as defined in the relevant 
                                income tax treaty referred to in 
                                subclause (I)).''.
    (b) Distributions of Real Estate Investment Trusts.--Paragraph (1) 
of section 897(h) of such Code is amended to read as follows:
            ``(1) Look-through of distributions.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), any distribution by a qualified 
                investment entity to a nonresident alien individual, a 
                foreign corporation, or other qualified investment 
                entity shall, to the extent attributable to gain from 
                sales or exchanges by the qualified investment entity 
                of United States real property interests, be treated as 
                gain recognized by such nonresident alien individual, 
                foreign corporation, or other qualified investment 
                entity from the sale or exchange of a United States 
                real property interest. Notwithstanding the preceding 
                sentence--
                            ``(i) any distribution by a qualified 
                        investment entity to a nonresident alien 
                        individual or a foreign corporation with 
                        respect to any class of stock which is 
                        regularly traded on an established securities 
                        market located in the United States shall not 
                        be treated as gain recognized from the sale or 
                        exchange of a United States real property 
                        interest if such individual or corporation did 
                        not own more than 5 percent of such class of 
                        stock (10 percent in the case of stock of a 
                        real estate investment trust) at any time 
                        during the 1-year period ending on the date of 
                        such distribution, and
                            ``(ii) 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).
                    ``(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 of Domestically Controlled.--Subparagraph (B) of 
section 897(h)(4) of such Code is amended by adding at the end 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 qualified investment entity is 
domestically controlled. In making such 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 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 
such Code 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 Date.--The amendments made by this section shall 
apply to dispositions and distributions made after the date of the 
enactment of this Act.

SEC. 3. UNITED STATES REAL PROPERTY INTEREST.

    (a) In General.--Subparagraph (B) of section 897(c)(1) of the 
Internal Revenue Code of 1986 is amended by striking all that precedes 
clause (i) 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 subsection (a) shall 
apply to dispositions made after the date of the enactment of this Act.
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