Real Estate Jobs and Investment Act of 2011 - Amends the Internal Revenue Code to increase from 5% to 10% the allowable ownership interest in real estate investment trust (REIT) stock for purposes of tax exemptions allowed by the Foreign Investment in Real Property Tax Act relating to foreign investment in United States real property interests.
[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.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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