[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3749 Introduced in House (IH)]

<DOC>






118th CONGRESS
  1st Session
                                H. R. 3749

 To amend the Internal Revenue Code of 1986 to modify the treatment of 
 certain rents received by real estate investment trusts from related 
                                parties.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 30, 2023

  Mr. LaHood (for himself and Mr. Schneider) 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 
 certain rents received by real estate investment trusts from related 
                                parties.

    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 ``Retail Revitalization Act of 2023''.

SEC. 2. MODIFICATION OF TREATMENT OF CERTAIN RENTS RECEIVED BY REAL 
              ESTATE INVESTMENT TRUST FROM RELATED PARTIES.

    (a) Special Rule for Distressed Tenants.--
            (1) In general.--Section 856(d) of the Internal Revenue 
        Code of 1986 is amended by adding at the end the following new 
        paragraph:
            ``(10) Special rule for distressed tenants.--
                    ``(A) In general.--Except as otherwise provided by 
                the Secretary, in the case of a real estate investment 
                trust which makes a qualified acquisition of a 
                qualified tenant during the 4-year period beginning on 
                the date of the enactment of this paragraph, paragraph 
                (2)(B) shall be applied with respect to such tenant by 
                substituting `50 percent' for `10 percent' each place 
                it appears therein.
                    ``(B) Qualified acquisition.--For purposes of this 
                paragraph--
                            ``(i) In general.--The term `qualified 
                        acquisition' means the acquisition by a real 
                        estate investment trust of stock, assets, or 
                        net profits in connection with the bankruptcy, 
                        insolvency (within the meaning of section 
                        108(d)(3)), or cash flow insolvency of a 
                        qualified tenant.
                            ``(ii) Cash flow insolvency.--For purposes 
                        of clause (i), a qualified tenant shall be 
                        treated as having cash flow insolvency 
                        following a reasonable determination by the 
                        real estate investment trust, based upon an 
                        examination of the facts and circumstances, 
                        that such tenant's revenue is insufficient to 
                        cover its debt service payments based on such 
                        tenant's applicable financial statement (as 
                        defined in section 451(b)(3)).
                    ``(C) Qualified tenant.--For purposes of this 
                paragraph--
                            ``(i) In general.--The term `qualified 
                        tenant' means, with respect to any acquisition 
                        referred to in subparagraph (B), any person 
                        from which the real estate investment trust 
                        received or accrued rents from real property 
                        pursuant to a lease which was in effect on the 
                        date of the enactment of this paragraph.
                            ``(ii) Renewals, etc., of existing 
                        leases.--For purposes of clause (i), a lease 
                        shall be treated as in effect on the date of 
                        the enactment of this paragraph if the 
                        conditions of paragraph (9)(C) are satisfied.
                            ``(iii) Successors.--The term `qualified 
                        tenant' shall include a person if such person 
                        is a successor to a qualified tenant within the 
                        meaning of subsection (g) (without regard to 
                        such person's status as a real estate 
                        investment trust or any continuity of 
                        shareholder interest requirement) or for 
                        purposes of section 381.
                    ``(D) Limitation on period for which treatment 
                applies.--With respect to any qualified acquisition, 
                subparagraph (A) shall apply only to amounts received 
                or accrued during the 7-taxable-year period beginning 
                with the taxable year which includes the date of such 
                acquisition.
                    ``(E) Coordination with certain other provisions.--
                For purposes of clauses (i) and (v) of paragraph 
                (8)(A), whether a person is described in paragraph 
                (2)(B) shall be determined after application of 
                subparagraph (A) of this paragraph.''.
            (2) Conforming amendment.--Section 856(d)(2)(B) of such 
        Code is amended by striking ``paragraph (8)'' and inserting 
        ``paragraphs (8) and (10)''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to qualified acquisitions (as defined in section 
        856(d)(10)(B) of the Internal Revenue Code of 1986, as added by 
        this subsection) after the date of the enactment of this Act, 
        in taxable years ending after such date.
    (b) Increase in Percentage of Ownership at Which Rents Are 
Generally Disqualified.--
            (1) In general.--Section 856(d)(2)(B) of such Code is 
        amended by striking ``10 percent'' each place it appears and 
        inserting ``30 percent''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to taxable years ending after the date of the 
        enactment of this Act.
    (c) Increase in Percentage of Ownership at Which Constructive 
Ownership Rules Begin To Apply.--
            (1) In general.--Section 856(d)(5) of such Code is 
        amended--
                    (A) by striking ``10 percent'' in subparagraph (A) 
                and inserting ``30 percent'', and
                    (B) by striking ``25 percent'' in subparagraph (B) 
                and inserting ``30 percent''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to taxable years ending after the date of the 
        enactment of this Act.
    (d) Limitation on Application of Constructive Ownership Rules.--
            (1) In general.--Section 856(d)(5) of such Code is amended 
        by striking ``and'' at the end of subparagraph (A), by striking 
        the period at the end of subparagraph (B) and inserting ``, 
        and'', and by adding at the end the following:
                    ``(C) except as otherwise provided by the 
                Secretary, stock, assets, and net profits 
                constructively owned by a partnership, estate, trust, 
                or corporation by reason of the application of section 
                318(a)(3) (after application of subparagraphs (A) and 
                (B)) shall not be considered as owned by it for 
                purposes of again applying such section in order to 
                make another person the constructive owner of such 
                stock, assets, or net profits.
        Subparagraph (C) shall not prevent any person from being the 
        constructive owner of stock, assets, or net profits of any 
        person as the result of any other application of section 318(a) 
        (as modified by this paragraph).''.
            (2) No inference.--Nothing in the amendments made by 
        paragraph (1) shall be construed to create any inference with 
        respect to the proper application of section 318 of the 
        Internal Revenue Code of 1986 to cases other than cases to 
        which such amendments apply.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years ending after the date of the 
        enactment of this Act.
    (e) Modification of Rental Exception for Taxable REIT 
Subsidiaries.--
            (1) In general.--Section 856(d)(8)(A)(i) of such Code is 
        amended to read as follows:
                            ``(i) In general.--The requirements of this 
                        subparagraph are met with respect to any 
                        property if--
                                    ``(I) not more than 30 percent of 
                                the leasable space of such property is 
                                rented to taxable REIT subsidiaries and 
                                other persons described in paragraph 
                                (2)(B) (determined without regard to 
                                paragraph (10)), and
                                    ``(II) not more than 50 percent of 
                                the leasable space of such property is 
                                rented to taxable REIT subsidiaries and 
                                other persons described in paragraph 
                                (2)(B) (determined after the 
                                application of paragraph (10)).''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to taxable years ending after the date of the 
        enactment of this Act.
                                 <all>