Page:United States Statutes at Large Volume 113 Part 3.djvu/426

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113 STAT. 1944 PUBLIC LAW 106-170—DEC. 17, 1999 Such an election, once made, shall be irrevocable unless both such trust and corporation consent to its revocation. Such election, and any revocation thereof, may be made without the consent of the Secretary. "(2) THIRTY-FIVE PERCENT OWNERSHIP IN ANOTHER TAXABLE REIT SUBSIDIARY. — The term 'taxable REIT subsidiary' includes, with respect to any real estate investment trust, any corporation (other than a real estate investment trust) with respect to which a taxable REIT subsidiary of such trust owns directly or indirectly— "(A) securities possessing more than 35 percent of the total voting power of the outstanding securities of such corporation, or "(B) securities having a value of more than 35 percent of the total value of the outstanding securities of such corporation. The preceding sentence shall not apply to a qualified REIT subsidiary (as defined in subsection (i)(2)). The rule of section 856(c)(7) shall apply for purposes of subparagraph (B). "(3) EXCEPTIONS.— The term 'taxable REIT subsidiary' shall not include— "(A) any corporation which directly or indirectly operates or manages a lodging facility or a health care facility, and "(B) any corporation which directly or indirectly provides to any other person (under a franchise, license, or otherwise) rights to suiy brand name under which any lodging facility or health care facility is operated. Subparagraph (B) shall not apply to rights provided to an eligible independent contractor to operate or manage a lodging facility if such rights are held by such corporation as a franchisee, licensee, or in a similar capacity and such lodging facility is either owned by such corporation or is leased to such corporation from the real estate investment trust. " (4) DEFINITIONS.— For purposes of paragraph (3)— "(A) LODGING FACILITY. —The term 'lodging facility' has the meaning given to such term by paragraph (9)(D)(ii). "(B) HEALTH CARE FACILITY. —The term 'health care facility' has the meaning given to such term by subsection (e)(6)(D)(ii).". (b) CONFORMING AMENDMENT.— Paragraph (2) of section 856(i) of such Code is amended by adding at the end the following new sentence: "Such term shall not include a taxable REIT subsidiary.". SEC. 544. LIMITATION ON EARNINGS STRIPPING. Paragraph (3) of section 163(j) of the Internal Revenue Code 26 USC 163. of 1986 (relating to limitation on deduction for interest on certain indebtedness) 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 new subparagraph: "(C) any interest paid or accrued (directly or indirectly) by a taxable REIT subsidiary (as defined in section 856(1)) of a real estate investment trust to such trust.". SEC. 545. 100 PERCENT TAX ON IMPROPERLY ALLOCATED AMOUNTS. (a) IN GENERAL.—Subsection (b) of section 857 of the Internal 26 USC 857. Revenue Code of 1986 (relating to method of taxation of real estate