118 STAT. 1441 PUBLIC LAW 108–357—OCT. 22, 2004 respect to any taxable year beginning after the date of the enactment of this subparagraph— ‘‘(i) the trust’s interest in the partnership assets shall be the trust’s proportionate interest in any securi ties issued by the partnership (determined without regard to subparagraph (A)(i) and paragraph (4), but not including securities described in paragraph (1)), and ‘‘(ii) the value of any debt instrument shall be the adjusted issue price thereof, as defined in section 1272(a)(4). ‘‘(4) CERTAIN PARTNERSHIP DEBT INSTRUMENTS NOT TREATED AS A SECURITY.—For purposes of applying subclause (III) of subsection (c)(4)(B)(iii)— ‘‘(A) any debt instrument issued by a partnership and not described in paragraph (1) shall not be considered a security to the extent of the trust’s interest as a partner in the partnership, and ‘‘(B) any debt instrument issued by a partnership and not described in paragraph (1) shall not be considered a security if at least 75 percent of the partnership’s gross income (excluding gross income from prohibited trans actions) is derived from sources referred to in subsection (c)(3). ‘‘(5) SECRETARIAL GUIDANCE.—The Secretary is authorized to provide guidance (including through the issuance of a written determination, as defined in section 6110(b)) that an arrange ment shall not be considered a security held by the trust for purposes of applying subclause (III) of subsection (c)(4)(B)(iii) notwithstanding that such arrangement otherwise could be considered a security under subparagraph (F) of sub section (c)(5).’’. (b) CLARIFICATION OF APPLICATION OF LIMITED RENTAL EXCEP TION.—Subparagraph (A) of section 856(d)(8) (relating to special rules for taxable REIT subsidiaries) is amended to read as follows: ‘‘(A) LIMITED RENTAL EXCEPTION.— ‘‘(i) IN GENERAL.—The requirements of this subparagraph are met with respect to any property if at least 90 percent of the leased space of the property is rented to persons other than taxable REIT subsidi aries of such trust and other than persons described in paragraph (2)(B). ‘‘(ii) RENTS MUST BE SUBSTANTIALLY COM PARABLE.—Clause (i) shall apply only to the extent that the amounts paid to the trust as rents from real property (as defined in paragraph (1) without regard to paragraph (2)(B)) from such property are substan tially comparable to such rents paid by the other ten ants of the trust’s property for comparable space. ‘‘(iii) TIMES FOR TESTING RENT COMPARABILITY.— The substantial comparability requirement of clause (ii) shall be treated as met with respect to a lease to a taxable REIT subsidiary of the trust if such requirement is met under the terms of the lease— ‘‘(I) at the time such lease is entered into,
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