Page:United States Statutes at Large Volume 100 Part 3.djvu/493

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2301

was a qualified REIT subsidiary ceases to meet the requirements of paragraph (2), such corporation shall be treated as a new corporation acquiring all of its assets (and assuming all of its liabilities) immediately before such cessation from the real estate investment trust in exchange for its stock." 0?) TEMPORARY INVESTMENT OF N E W EQUITY CAPITAL.—

(1) Paragraph (3) of section 856(c) is amended by striking out "and" at the end of subparagraph (G), by adding "and" at the end of subparagraph (H), and by inserting after subparagraph (H) the following new subparagraph: "(I) qualified temporary investment income;". (2) Subparagraph (B) of section 856(c)(6) is amended by adding at the end thereof the following new sentence: "Such term also includes any property (not otherwise a real estate asset) attributable to the temporary investment of new capital, but only if such property is stock or a debt instrument, and only for the 1year period beginning on the date the real estate trust receives such capital." (3) Paragraph (6) of section 856(c) is amended by redesignating subparagraph (D) as subparagraph (E) and by inserting after subparagraph (C) the following new subparagraph: "(D) QUALIFIED TEMPORARY INVESTMENT INCOME.—

"(i) IN GENERAL.—The term 'qualified temporary investment income' means any income which— "(I) is attributable to stock or a debt instrument, "(II) is attributable to the temporary investment of new capital, and "(III) is received or accrued during the 1-year period beginning on the date on which the real estate investment trust receives such capital. "(ii) NEW CAPITAL.—The term 'new capital' means any amount received by the real estate investment trust— "(I) in exchange for stock in such trust (other than amounts received pursuant to a dividend reinvestment plan), or "(II) in a public offering of debt obligations of such trust which have maturities of at least 5 years.' (c) TREATMENT OF SHARED APPRECIATION MORTGAGES.—Section 856

is amended by adding at the end thereof the following new subsection; "(j) TREATMENT OF SHARED APPRECIATION MORTGAGES.—

"(1) IN GENERAL.—Solely for purposes of subsection (c) of this section and section 857(b)(6), any income derived from a shared appreciation provision shall be treated as gain recognized on the sale of the secured property. "(2) TREATMENT OF INCOME.—For purposes of applying subsection (c) of this section and section 857(b)(6) to any income described in paragraph (1)— "(A) the real estate investment trust shall be treated as holding the secured property for the period during which it held the shared appreciation provision (or, if shorter, for the period during which the secured property was held by the person holding such property), and "(B) the secured property shall be treated as property described in section 1221(1) if it is so described in the hands

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