Page:United States Statutes at Large Volume 100 Part 3.djvu/496

 100 STAT. 2304

PUBLIC LAW 99-514—OCT. 22, 1986 J i.

' '(A) the amount (if any) by which— "(i) the amounts includible in gross income under section 467 (relating to certain payments for the use of property or services), exceed "(ii) the amounts which would have been includible in gross income without regard to such section, "(B) in the case of a real estate investment trust using the cash receipts and disbursements method of accounting, the amount (if any) by which— "(i) the amounts includible in gross income as original issue discount on instruments to which section 1274 (relating to certain debt instruments issued for property) applies, exceed "(ii) the amount of money and the fair market value of other property received during the taxable year under such instruments; plus "(C) any income on the disposition of a real estate asset if— "(i) there is a determination (as defined in section 860(e)) that such income is not eligible for nonrecognition under section 1031, and "(ii) failure to meet the requirements of section 1031 was due to reasonable cause and not to willful neglect." SEC. 665. TREATMENT OF CAPITAL GAINS. (a) COORDINATION OF NET OPERATING LOSS DEDUCTION WITH PAYMENT OF CAPITAL GAIN DIVIDENDS.—

(1) IN GENERAL.—Paragraph (3) of section 8570b) (relating to capital gains) is amended by adding at the end thereof the following new subparagraph: "(D)

COORDINATION WITH NET OPERATING LOSS PROVI-

SIONS.—For purposes of section 172, if a real estate investment trust pays capital gain dividends during any taxable year, the amount of the net capital gain for such taxable year (to the extent such gain does not exceed the amount of such capital gain dividends) shall be excluded in determining— "(i) the net operating loss for the taxable year, and "(ii) the amount of the net operating loss of any prior taxable year which may be carried through such taxable year under section 1720t))(2) to a succeeding taxable year." (2) REPEAL OF LIMITATION OF NET CAPITAL GAIN TO REAL ESTATE

INVESTMENT TRUST TAXABLE INCOME.—Subparagraph (C) of section 85703)(3) (defining capital gain dividend) is amended by striking out the last sentence. (b) NOTICE OF CAPITAL GAINS DIVIDENDS MAY B E MAILED WITH ANNUAL REPORT.—

(1) Subparagraph (C) of section 8570t))(3) (defining capital gain dividend) is amended by striking out "the close of its taxable year" and inserting in lieu thereof "the close of its taxable year (or mailed to its shareholders or holders of beneficial interests with its annual report for the taxable year)". (2) Subsection (c) of section 858 (relating to notice to shareholders) is amended by striking out "distribution is made" and inserting in lieu thereof "distribution is made (or mailed to its

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