H.R. 1414 — To amend the Internal Revenue Code of 1986 with respect to the treatment of certain real estate activities under the limitations on losses from passive activities.

 
HR 1414 IH
102d CONGRESS
1st Session
 H. R. 1414
To amend the Internal Revenue Code of 1986 with respect to the treatment of
certain real estate activities under the limitations on losses from passive
activities.
IN THE HOUSE OF REPRESENTATIVES
March 13, 1991
Mr. ANDREWS of Texas (for himself, Mr. THOMAS of California, Mr. ARCHER,
Mr. BUNNING, Mr. MATSUI, Mr. VANDER JAGT, Mr. SUNDQUIST, Mr. PICKLE,
Mr. JACOBS, Mr. CHANDLER, Mr. JENKINS, Mr. CRANE, Mr. SHAW, Mr. GRANDY,
Mrs. JOHNSON of Connecticut, Mr. ANTHONY, Mr. MOODY, Mr. SCHULZE, Mr. RANGEL,
Mr. DOWNEY, Mr. MACHTLEY, Mr. COX of California, Mr. DICKINSON, Mr. LEHMAN of
Florida, Mr. JOHNSON of South Dakota, Mr. DERRICK, Mr. SHAYS, Mr. VALENTINE,
Mr. LEWIS of California, Mr. WILSON, Mr. SMITH of Iowa, Mr. HORTON,
Ms. LONG, Mr. DELAY, Mr. DEFAZIO, Mr. PRICE, Mr. GOSS, Mr. BILIRAKIS,
Mr. MCMILLEN of Maryland, Mr. HUNTER, Mr. KOSTMAYER, Mr. ROBERTS, Mr. STAGGERS,
Mrs. VUCANOVICH, Mr. COSTELLO, Mr. BATEMAN, Mr. PALLONE, Mr. BAKER, Mr. GEREN
of Texas, Mr. LIPINSKI, Mr. WOLPE, Mr. BONIOR, Mr. COMBEST, Mr. COLEMAN of
Missouri, Mr. CHAPMAN, Mr. CAMPBELL of Colorado, Mr. HALL of Texas, Mr. HEFNER,
Mr. JONTZ, Mr. SKEEN, Mr. BURTON of Indiana, Mr. FASCELL, Mr. BEREUTER,
Mr. SMITH of Florida, Mr. POSHARD, Mr. CLINGER, Mr. DWYER of New Jersey,
Mr. LAUGHLIN, Mr. PAXON, Mr. QUILLEN, Mr. FEIGHAN, Mr. EMERSON, Mr. DAVIS,
Mr. BALLENGER, Mr. KYL, Mr. HATCHER, Mr. STUMP, Mr. HAYES of Louisiana,
Mrs. MORELLA, Mr. COLEMAN of Texas, Mr. SMITH of Texas, Mr. HUBBARD,
Mr. DUNCAN, Mrs. LLOYD, Mr. BRUCE, Mr. ANNUNZIO, Mr. TAUZIN, Mr. INHOFE,
Mr. MCCRERY, Mr. LANCASTER, Mr. GILLMOR, Mr. FRANK of Massachusetts,
Mr. BRYANT, Mr. THOMAS of Wyoming, Mr. MILLER of Washington, Mr. SAXTON,
Mr. MARTIN, Mr. PETERSON of Minnesota, Mr. COBLE, Mrs. SCHROEDER, Mr. HANSEN,
Mr. MRAZEK, Mr. DORNAN of California, Mr. RICHARDSON, Mr. ORTIZ, Mr. CLEMENT,
Mr. MURPHY, Mr. BROOKS, Mr. BUSTAMANTE, Mr. ROTH, Mr. KOLTER, Mr. NAGLE,
Mr. OLIN, Mr. CARR, Mr. BOUCHER, Mr. HARRIS, Mr. KLECZKA, Mr. MCEWEN,
Mrs. BYRON, Ms. KAPTUR, Mr. GALLEGLY, Mr. LUKEN, Mr. MONTGOMERY, Mr. HOBSON,
Mr. HOPKINS, Mr. STENHOLM, Mr. WEBER, Mr. ARMEY, Mr. GUNDERSON, Mr. BROWN,
Mr. OXLEY, Mr. WELDON, Mr. DREIER of California, Mr. HYDE, Mr. LIVINGSTON,
Ms. PELOSI, Mr. ROHRABACHER, Mr. MCNULTY, Mr. PAYNE of Virginia, Mr. SPENCE,
Mr. PICKETT, Mr. MANTON, Mr. AUCOIN, Mr. COX of Illinois, Mr. RAVENEL,
Mr. MARTINEZ, Mr. GEKAS, Mr. EVANS, Mr. SCHAEFER, Mr. BOEHNER, Mr. HASTERT,
Mrs. BOXER, Mr. SERRANO, Mr. HERGER, Mr. BILBRAY, Mr. TALLON, Mr. MCDADE,
Mr. SISISKY, Mr. LENT, Mr. LEWIS of Florida, Mr. TORRICELLI, Mr. HOCHBRUECKNER,
Mr. CAMPBELL of California, Mr. THOMAS of Georgia, Mr. SCHIFF, Ms. MOLINARI,
Mr. GALLO, Mr. PANETTA, Mr. FIELDS, Mr. ACKERMAN, Mr. ERDREICH, Mr. MOLLOHAN,
Mr. ASPIN, Mr. SANGMEISTER, Mr. UPTON, Mr. RAY, Mr. SMITH of New Jersey,
Mr. MOORHEAD, Mr. ENGEL, Mr. HUCKABY, Mr. ROE, Mr. VISCLOSKY, Mr. LOWERY
of California, Mr. SPRATT, Mr. DANNEMEYER, Mr. DURBIN, Mr. JEFFERSON,
Mr. FOGLIETTA, Mr. ECKART, Mr. CAMP, Mr. SKAGGS, Mr. PORTER, Mr. ALEXANDER,
Mrs. LOWEY of New York, Mr. APPLEGATE, Mr. MYERS of Indiana, Mr. PARKER,
Mr. JONES of Georgia, Mr. GORDON, Mr. SLAUGHTER of Virginia, Mr. JOHNSTON
of Florida, Mr. RIGGS, Mr. SENSENBRENNER, Mr. CUNNINGHAM, Mr. DOOLITTLE,
Mr. TANNER, Mr. STEARNS, Mr. FISH, Mr. FAWELL, Mr. BARTON of Texas,
Mr. MCCLOSKEY, Mr. LAGOMARSINO, Mr. SOLOMON, Mr. KLUG, Mr. BOEHLERT, Mr. NEAL
of North Carolina, Mr. SARPALIUS, Mrs. COLLINS of Illinois, Mr. ALLARD,
Mr. NOWAK, Mr. HALL of Ohio, Mr. LEHMAN of California, Mr. EDWARDS of Texas,
Mr. DARDEN, Mr. SMITH of Oregon, Mr. FROST, Mr. GLICKMAN, Mr. HOLLOWAY,
Mr. ROWLAND, Mr. WYDEN, and Mr. BARNARD) introduced the following bill;
which was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 with respect to the treatment of
certain real estate activities under the limitations on losses from passive
activities.
  Be it enacted by the Senate and House of Representatives of the United
  States of America in Congress assembled,
That subsection (c) of section 469 of the Internal Revenue Code of 1986
(relating to passive activity losses and credits limited) is amended by
adding at the end the following new paragraphs:
  `(7) TAXPAYERS ENGAGED IN THE REAL PROPERTY BUSINESS- In the case of
  a taxpayer engaged in the real property business, the determination of
  what constitutes an activity and whether an activity is a passive activity
  shall be made by treating the taxpayer's rental real property operations,
  undertakings and activities in the same manner as nonrental trade or
  business operations, undertakings, and activities.
  `(8) INDIVIDUALS ENGAGED IN THE REAL PROPERTY BUSINESS- For purposes of
  paragraph (7), an individual is engaged in the real property business if--
  `(A) such individual spends at least 50 percent of such individual's
  working time in real property operations; and
  `(B) such individual spends more than 500 hours during the taxable year
  in real property operations.
  `(9) REAL PROPERTY OPERATIONS- For purposes of paragraph (8), the term `real
  property operations' means any real property development, redevelopment,
  construction, reconstruction, acquisition, conversion, rental, operation,
  management, leasing, brokerage, appraisal, and finance operations.
  `(10) WORKING TIME- For purposes of paragraph (8), the term `working
  time' means any time spent as an employee, sole proprietor, S corporation
  shareholder, partner in a partnership, or beneficiary of a trust or estate.
  `(11) CLOSELY HELD C CORPORATIONS ENGAGED IN THE REAL PROPERTY BUSINESS-
  For purposes of paragraph (7), a closely held C corporation is engaged in
  the real property business if--
  `(A) 1 or more shareholders owning stock representing more than 50 percent
  (by value) of the outstanding stock of such corporation materially
  participate in the aggregate real property activities of such corporation; or
  `(B) such corporation meets the requirements of section 465(c)(7)(C)
  (without regard to clause (iv)) with respect to the aggregate real property
  activities of such corporation.'
  (b)(1) Paragraph (2) of section 469(c) of such Code is amended to read
  as follows:
  `(2) PASSIVE ACTIVITY INCLUDES CERTAIN RENTAL ACTIVITIES- Except for
  rental activities treated in the same manner as nonrental trade or
  business activities pursuant to paragraph (7), each rental activity is a
  passive activity without regard to whether or not the taxpayer materially
  participates in the rental activity.'
  (2) Paragraph (4) of such section 469(c) is amended to read as follows:
  `(4) MATERIAL PARTICIPATION NOT REQUIRED FOR PARAGRAPH (3)- Paragraph (3)
  shall be applied without regard to whether or not the taxpayer materially
  participates in the activity.'
  (c) The amendments made by this section shall apply to taxable years
  beginning after December 31, 1991.
To amend the Internal Revenue Code of 1986 with respect to the treatment of certain real estate activities under the limitations on losses from passive activities.

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