Page:United States Statutes at Large Volume 100 Part 3.djvu/494

 100 STAT. 2302

PUBLIC LAW 99-514—OCT. 22, 1986 of the person holding the secured property (or it would be so described if held by the real estate investment trust). "(3)

COORDINATION

WITH

PROHIBITED

TRANSACTIONS

SAFE

HARBOR.—For purposes of section 857(b)(6)(C)— "(A) the real estate investment trust shall be treated as having sold the secured property when it recognizes any income described in paragraph (1), and "(B) any expenditures made by any holder of the secured property shall be treated as made by the real estate investment trust. "(4) DEFINITIONS.—For purposes of this subsection— "(A) SHARED APPRECIATION PROVISION.—The term 'shared appreciation provision' means any provision— "(i) which is in connection with an obligation which is held by the real estate investment trust and is secured by an interest in real property, and "(ii) which entitles the real estate investment trust to receive a specified portion of any gain realized on the sale or exchange of such real property (or of any gain which would be realized if the property were sold on a specified date). "(B) SECURED PROPERTY.—The term 'secured property' means the real property referred to in subparagraph (A)." SEC. 663. DEFINITION OF RENTS. (a) MODIFICATION OF INDEPENDENT CONTRACTOR REQUIREMENTS.—

Paragraph (2) of section 856(d) (relating to certain amounts excluded from rents from real property) is amended by adding at the end thereof the following: "Subparagraph (C) shall not apply with respect to any amount if such amount would be excluded from unrelated business taxable income under section 512(b)(3) if received by an organization described in section 511(a)(2)." (b) CERTAIN RENTS OR INTEREST BASED ON NET INCOME OR PROFITS PERMITTED.—

(1) RENTS.—Subsection (d) of section 856 is amended by adding at the end thereof the following new paragraph: "(6) SPECIAL RULE FOR CERTAIN PROPERTY SUBLEASED BY TENANT OF REAL ESTATE INVESTMENT TRUSTS.— "(A) IN GENERAL.—If—

"(i) a real estate investment trust receives or accrues, with respect to real or personal property, amounts from a tenant which derives substantially all of its income with respect to such property from the subleasing of substantially all of such property, and "(ii) such tenant receives or accrues, directly or indirectly, from subtenants only amounts which are qualified rents, then the amounts that the trust receives or accrues from the tenant shall not be excluded from the term 'rents from real property' solely by reason of being based on the income or profits of such tenant. "(B) QUALIFIED RENTS.—For purposes of subparagraph (A), the term 'qualified rents' means any amount which would be treated as rents from real property if received by the real estate investment trust."

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