Page:United States Statutes at Large Volume 100 Part 3.djvu/323

 PUBLIC LAW 99-514—OCT. 22, 1986

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100 STAT. 2131

months after the date such property is first used by the tax-exempt entity (or a related entity). "(4) RELATED ENTITIES.—For purposes of this subsection— "(A)(i) Each governmental unit and each agency or instrumentality of a governmental unit is related to each other such unit, agency, or instrumentality which directly or indirectly derives its powers, rights, and duties in whole or in part from the same sovereign authority. "(ii) For purposes of clause (i), the United States, each State, and each possession of the United States shall be treated as a separate sovereign authority. "(B) Any entity not described in subparagraph (A)(i) is related to any other entity if the 2 entities have— "(i) significant common purposes and substantial common membership, or "(ii) directly or indirectly substantial common direction or control., "(C)(i) An entity is related to another entity if either entity owns (directly or through 1 or more entities) a 50 percent or greater interest in the capital or profits of the other entity. "(ii) For purposes of clause (i), entities treated as related under subparagraph (A) or (B) shall be treated as 1 entity. "(D) An entity is related to another entity with respect to a transaction if such transaction is part of an attempt by such entities to avoid the application of this subsection. "(5) TAX-EXEMPT USE OF PROPERTY LEASED TO PARTNERSHIPS, ETC., DETERMINED AT PARTNER LEVEL.—For purposes of this

subsection— "(A) IN GENERAL.—In the case of any property which is leased to a partnership, the determination of whether any portion of such property is tax-exempt use property shall be - i made by treating each tax-exempt entity partner's propor5- > tionate share (determined under paragraph (6)(C)) of such property as being leased to such partner. "(B) OTHER PASS-THRU ENTITIES; TIERED ENTITIES.—Rules

as.

similar to the rules of subparagraph (A) shall also apply in the case of any pass-thru entity other than a partnership and in the case of tiered partnerships and other entities. "(C) PRESUMPTION WITH RESPECT TO FOREIGN ENTITIES.—

Unless it is otherwise established to the satisfaction of the toSecretary, it shall be presumed that the partners of a foreign partnership (and the beneficiaries of any other I foreign pass-thru entity) are persons who are not United States persons.
 * ^;.. "(6) TREATMENT OF PROPERTY OWNED BY PARTNERSHIPS, ETC.—

"(A) IN GENERAL.—For purposes of this subsection, if— • "(i) any property which (but for this subparagraph) is •f'snot tax-exempt use property is owned by a partnership which has both a tax-exempt entity and a person who is not a tax-exempt entity as partners, and "(ii) any allocation to the tax-exempt entity of partnership items is not a qualified allocation, an amount equal to such tax-exempt entity's proportionate share of such property shall (except as provided in paragraph (I)(D)) be treated as tax-exempt use property.

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