107 STAT. 446 PUBLIC LAW 103-66 —AUG. 10, 1993 " (ii) PREDOMINANTLY HELD. —For purposes of clause (i), a real estate investment trust is predominantly held by qualified trusts if— "(I) at least 1 qualified trust holds more than 25 percent (by value) of the interests in such real estate investment trust, or "(II) 1 or more qualified trusts (each of whom own more than 10 percent by value of the interests in such real estate investment trust) hold in the aggregate more than 50 percent (by value) of the interests in such real estate investment trust. "(E) QUALIFIED TRUST.— For purposes of this paragraph, the term 'qualified trust' means any trust described m section 401(a) and exempt from tax under section 501(a)." 26 USC 856 note. (b) EFFECTIVE DATE.— The amendment made by this section shall apply to taxable years beginning after December 31, 1993. Subpart D—Discharge of Indebtedness SEC. 13150. EXCLUSION FROM GROSS INCOME FOR INCOME FROM DIS- CHARGE OF QUALIFIED REAL PROPERTY BUSINESS INDEBTEDNESS. 26 USC 108. (a) IN GENERAL.— Paragraph (1) of section 108(a) (relating to income from discharge of indebtedness) is amended by striking "or" at the end of subparagraph (B), by striking the period at the end of subparagraph (C) and inserting ", or", and by adding at the end the following new subparagraph: "(D) in the case of a taxpayer other than a C corporation, the indebtedness discharged is qualified real property business indebtedness." (b) QUALIFIED REAL PROPERTY BUSINESS INDEBTEDNESS.—Section 108 is amended by inserting after subsection (b) the following new subsection: "(c) TREATMENT OF DISCHARGE OF QUALIFIED REAL PROPERTY BUSINESS INDEBTEDNESS. — "(1) BASIS REDUCTION.— "(A) IN GENERAL.— The amount excluded from gross income under subparagraph (D) of subsection (a)(1) shall be applied to reduce the basis of the depreciable real property of the taxpayer. "(B) CROSS REFERENCE. —For provisions making the reduction described in subparagraph (A), see section 1017. "(2) LIMITATIONS.— " (A) INDEBTEDNESS IN EXCESS OF VALUE.— The amount excluded under subparagraph (D) of subsection (a)(1) with respect to any Qualified real property business indebtedness shall not exceed the excess (if any) of— "(i) the outstanding principal amount of such indebtedness (immediately before the discharge), over "(ii) the fair market value of the real property described in paragraph (3)(A) (as of such time), reduced by the outstanding principal amount of any other qualified real property business indebtedness secured by such property (as of such time). "(B) OVERALL LIMITATION.— The amount excluded under subparagraph (D) of subsection (a)(1) shall not exceed
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