[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2128 Introduced in House (IH)]
114th CONGRESS
1st Session
H. R. 2128
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
April 30, 2015
Mr. Brady of Texas (for himself, Mr. Crowley, Mr. McDermott, Mr.
Reichert, Mr. Marchant, Mr. Young of Indiana, Mr. Roskam, Mr. Meehan,
Ms. Linda T. Saanchez of California, Mr. Renacci, Mr. Reed, Mr. Tiberi,
Mr. Blumenauer, Mr. Rangel, Mr. Thompson of California, Mr. Larson of
Connecticut, Mr. Neal, Mr. Kind, Mr. King of New York, Mr. Sessions,
Mr. Sam Johnson of Texas, Mr. Dold, Mr. Buchanan, and Ms. Jenkins of
Kansas) 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; ETC.
(a) Short Title.--This Act may be cited as the ``Real Estate
Investment and Jobs Act of 2015''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
SEC. 2. EXCEPTION FROM FIRPTA FOR CERTAIN STOCK OF REAL ESTATE
INVESTMENT TRUSTS.
(a) Modifications of Ownership Rules.--
(1) In general.--Section 897 is amended by adding at the
end the following new subsection:
``(k) Special Rules Relating to Real Estate Investment Trusts.--
``(1) Increase in percentage ownership for exceptions for
persons holding publicly traded stock.--
``(A) Dispositions.--In the case of any disposition
of stock in a real estate investment trust, paragraphs
(3) and (6)(C) of subsection (c) shall each be applied
by substituting `more than 10 percent' for `more than 5
percent'.
``(B) Distributions.--In the case of any
distribution from a real estate investment trust,
subsection (h)(1) shall be applied by substituting `10
percent' for `5 percent'.
``(2) Stock held by qualified shareholders not treated as
usrpi.--
``(A) In general.--Except as provided in
subparagraph (B)--
``(i) stock of a real estate investment
trust which is held directly by a qualified
shareholder shall not be treated as a United
States real property interest, and
``(ii) notwithstanding subsection (h)(1),
any distribution to a qualified shareholder
shall not be treated as gain recognized from
the sale or exchange of a United States real
property interest to the extent the stock of
the real estate investment trust held by such
qualified shareholder is not treated as a
United States real property interest under
clause (i).
``(B) Exception.--In the case of a qualified
shareholder with 1 or more applicable investors--
``(i) subparagraph (A)(i) shall not apply
to so much of the stock of a real estate
investment trust held by a qualified
shareholder as bears the same ratio to the
value of the interests (other than interests
held solely as a creditor) held by such
applicable investors in the qualified
shareholder bears to value of all interests
(other than interests held solely as a
creditor) in the qualified shareholder, and
``(ii) a percentage equal to the ratio
determined under clause (i) of the amounts
realized by the qualified shareholder with
respect to any disposition of stock in the real
estate investment trust or with respect to any
distribution from the real estate investment
trust attributable to gain from sales or
exchanges of a United States real property
interest shall be treated as amounts realized
from the disposition of United States real
property interests.
``(C) Applicable investor.--For purposes of this
paragraph, the term `applicable investor' means, with
respect to any qualified shareholder holding stock in a
real estate investment trust, a person (other than a
qualified shareholder) which--
``(i) holds an interest (other than an
interest solely as a creditor) in such
qualified shareholder, and
``(ii) holds more than 10 percent of the
stock of such real estate investment trust
(whether or not by reason of the person's
ownership interest in the qualified
shareholder).
``(D) Constructive ownership rules.--For purposes
of subparagraphs (B)(i) and (C), the constructive
ownership rules under subsection (c)(6)(C) shall apply.
``(3) Qualified shareholder.--For purposes of this
subsection--
``(A) In general.--The term `qualified shareholder'
means a foreign person--
``(i) which is eligible for benefits of a
comprehensive income tax treaty with the United
States which includes an exchange of
information program,
``(ii) which is a qualified collective
investment vehicle,
``(iii) the principal class of interests of
which is listed and regularly traded on 1 or
more recognized stock exchanges (as defined in
such comprehensive income tax treaty), and
``(iv) which maintains records on the
identity of each person who, at any time during
the foreign person's taxable year, holds
directly 5 percent or more of the class of
interest described in clause (iii).
``(B) Qualified collective investment vehicle.--For
purposes of this subsection, the term `qualified
collective investment vehicle' means a foreign person--
``(i) which, under the comprehensive income
tax treaty described in subparagraph (A)(i), is
eligible for a reduced rate of withholding with
respect to ordinary dividends paid by a real
estate investment trust even if such person
holds more than 10 percent of the stock of such
real estate investment trust, or
``(ii) which is designated as a qualified
collective investment vehicle by the Secretary
and is either--
``(I) fiscally transparent within
the meaning of section 894, or
``(II) required to include
dividends in its gross income, but
entitled to a deduction for
distributions to persons holding
interests (other than interests solely
as a creditor) in such foreign
person.''.
(2) Conforming amendments.--
(A) Section 897(c)(1)(A) is amended by inserting
``or subsection (k)'' after ``subparagraph (B)'' in the
matter preceding clause (i).
(B) Section 857(b)(3)(F) is amended by inserting
``or section 897(k)(2)(A)(ii)'' after ``897(h)(1)''.
(b) Determination of Domestic Control.--
(1) Special ownership rules.--
(A) In general.--Section 897(h)(4) is amended by
adding at the end the following new subparagraph:
``(E) Special ownership rules.--For purposes of
determining the holder of stock under subparagraphs (B)
and (C)--
``(i) in the case of any class of stock of
the qualified investment entity which is
regularly traded on an established securities
market in the United States, a person holding
less than 5 percent of such class of stock at
all times during the testing period shall be
treated as a United States person unless the
qualified investment entity has actual
knowledge that such person is not a United
States person,
``(ii) any stock in the qualified
investment entity held by another qualified
investment entity--
``(I) any class of stock of which
is regularly traded on an established
securities market, or
``(II) which is a regulated
investment company which issues
redeemable securities (within the
meaning of section 2 of the Investment
Company Act of 1940),
shall be treated as held by a foreign person,
except that if such other qualified investment
entity is domestically controlled (determined
after application of this subparagraph), such
stock shall be treated as held by a United
States person, and
``(iii) any stock in the qualified
investment entity held by any other qualified
investment entity not described in subclause
(I) or (II) of clause (ii) shall only be
treated as held by a United States person in
proportion to the stock of such other qualified
investment entity which is (or is treated under
clause (ii) or (iii) as) held by a United
States person.''.
(B) Conforming amendment.--The heading for
paragraph (4) of section 897(h) is amended by inserting
``and special rules'' after ``Definitions''.
(2) Technical amendment.--Clause (ii) of section
897(h)(4)(A) is amended by inserting ``and for purposes of
determining whether a real estate investment trust is a
domestically controlled qualified investment entity under this
subsection'' after ``real estate investment trust''.
(c) Effective Dates.--
(1) In general.--The amendments made by subsection (a)
shall take effect on the date of enactment and shall apply to--
(A) any disposition on and after the date of the
enactment of this Act, and
(B) any distribution by a real estate investment
trust on or after the date of the enactment of this Act
which is treated as a deduction for a taxable year of
such trust ending after such date.
(2) Determination of domestic control.--The amendments made
by subsection (b)(1) shall take effect on the date of the
enactment of this Act.
(3) Technical amendment.--The amendment made by subsection
(b)(2) shall take effect on January 1, 2015.
SEC. 3. EXCEPTION FOR INTERESTS HELD BY FOREIGN RETIREMENT OR PENSION
FUNDS.
(a) In General.--Section 897, as amended by section 2, is amended
by adding at the end the following new subsection:
``(l) Exception for Interests Held by Foreign Pension Funds.--
``(1) In general.--This section shall not apply to any
United States real property interest held by--
``(A) a qualified foreign pension fund, or
``(B) any entity all of the interests of which are
held by a qualified foreign pension fund.
``(2) Qualified foreign pension fund.--For purposes of this
subsection, the term `qualified foreign pension fund' means any
trust, corporation, or other organization or arrangement--
``(A) which is created or organized under the law
of a country other than the United States,
``(B) which is established to provide retirement or
pension benefits to participants or beneficiaries that
are current or former employees (or persons designated
by such employees) of one or more employers in
consideration for services rendered,
``(C) which does not have a single participant or
beneficiary with a right to more than five percent of
its assets or income,
``(D) which is subject to government regulation and
provides annual information reporting about its
beneficiaries to the relevant tax authorities in the
country in which it is established or operates, and
``(E) with respect to which, under the laws of the
country in which it is established or operates--
``(i) contributions to such trust,
corporation, organization, or arrangement which
would otherwise be subject to tax under such
laws are deductible or excluded from the gross
income of such entity or taxed at a reduced
rate, or
``(ii) taxation of any investment income of
such trust, corporation, organization or
arrangement is deferred or such income is taxed
at a reduced rate.
``(3) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out the
purposes of this subsection.''.
(b) Exemption From Withholding.--Section 1445(f)(3) is amended by
striking ``any person'' and all that follows and inserting the
following: ``any person other than--
``(A) a United States person, and
``(B) except as otherwise provided by the
Secretary, an entity with respect to which section 897
does not apply by reason of subsection (l) thereof.''.
(c) Effective Date.--The amendments made by this section shall
apply to dispositions and distributions after the date of the enactment
of this Act.
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