94 STAT. 2684
PUBLIC LAW 96-499—DEC. 5, 1980 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 (l)(A)(ii), held more than 5 percent of such class of stock. "(4) INTERESTS HELD BY FOREIGN CORPORATIONS AND BY PARTNERSHIPS, TRUSTS, AND ESTATES.—For purposes of determining
whether any corporation is a United States real property holding corporation— "(A) FOREIGN CORPORATIONS.—Paragraph (l)(A)(ii) shall be applied by substituting 'any corporation (whether foreign or domestic)' for 'any domestic corporation'. "(B) INTERESTS HELD BY PARTNERSHIPS, ETC.—United States real property interests held by a partnership, trust, or estate shall be treated as owned proportionately by its partners or beneficiaries. "(5) TREATMENT OF CONTROLLING INTERESTS.—
"(A) IN GENERAL.—Under regulations, for purposes of determining whether any corporation is a United States real property holding corporation, if any corporation (hereinafter in this paragraph referred to as the 'first corporation') holds a controlling interest in a second corporation— "(i) the stock which the first corporation holds in the second corporation shall not be taken into account, "(ii) the first corporation shall be treated as holding a portion of each asset of the second corporation equal to the percentage of the fair market value of the stock of the second corporation represented by the stock held by the first corporation, and "(iii) any asset treated as held by the first corporation by reason of clause (ii) which is used or held for use by the second corporation in a trade or business shall be treated as so used or held by the first corporation. Any asset treated as held by the first corporation by reason of the preceding sentence shall be so treated for purposes of applying the preceding sentence successively to corporations which are above the first corporation in a chain of corporations. "(B) CONTROLLING INTEREST.—For purposes of subpara-
graph (A), the term 'controlling interest' means 50 percent or more of the fair market value of all classes of stock of a corporation. "(6) OTHER SPECIAL RULES.— "(A) INTEREST IN REAL PROPERTY.—The term 'interest in
real property' includes fee ownership and co-ownership of land or improvements thereon, leaseholds of land or improvements thereon, options to acquire land or improvements thereon, and options to acquire leaseholds of land or improvements thereon. "(B) REAL PROPERTY INCLUDES ASSOCIATED PERSONAL PROP-
ERTY.—The term 'real property' includes movable walls, furnishings, and other personal property associated with the use of the real property. "(C) CONSTRUCTIVE OWNERSHIP RULES.—For purposes of determining under paragraph (3) whether any person holds more than 5 percent of any class of stock and of determining under paragraph (5) whether a person holds a controlling interest in any corporation, section 318(a) shall apply (except
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