Page:United States Statutes at Large Volume 100 Part 3.djvu/498

 100 STAT. 2306

PUBLIC LAW 99-514—OCT. 22, 1986

the interest (for which such company is liable) which is attributable solely to such increase." (b) CONFORMING AMENDMENT.—

(1) Subsection (j) of section 860 is amended by striking out "qualified investment entity" and inserting in lieu thereof "regulated investment company". (2) The table of sections for subchapter B of chapter 68 is amended by striking out the item relating to section 6697 and inserting in lieu thereof the following: "Sec. 6697. Assessable penalties with respect to liability for tax of regulated investment companies." SEC. 668. EXCISE TAX ON UNDISTRIBUTED INCOME OF REAL ESTATE INVESTMENT TRUSTS.

(a) GENERAL RULE.—Section 4981 is amended to read as follows: "SEC. 498L EXCISE TAX ON UNDISTRIBUTED INCOME OF REAL ESTATE INVESTMENT TRUSTS.

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"(a) IMPOSITION OF TAX.—There is hereby imposed a tax on every real estate investment trust for each calendar year equal to 4 percent of the excess (if any) of— "(1) the required distribution for such calendar year, over "(2) the distributed amount for such calendar year. "(b) REQUIRED DISTRIBUTION.—For purposes of this section— "(1) IN GENERAL.—The term 'required distribution' means, with respect to any calendar year, the sum of— "(A) 85 percent of the real estate investment trust's ordinary income for such calendar year, plus "(B) 95 percent of the real estate investment trust's capital gain net income for such calendar year. "(2) INCREASE BY PRIOR YEAR SHORTFALL.—The amount determined under paragraph (1) for any calendar year shall be increased by the excess (if any) of— "(A) the grossed up required distribution for the preceding calendar year, over "(B) the distributed amount for such preceding calendar year. "(3) GROSSED UP REQUIRED DISTRIBUTION.—The grossed up required distribution for any calendar year is the required distribution for such year determined— "(A) with the application of paragraph (2) to such taxable year, and "(B) by substituting '100 percent' for each percentage set forth in paragraph (1). "(c) DISTRIBUTED AMOUNT.—For purposes of this section— "(1) IN GENERAL.—The term 'distributed amount' means, with respect to any calendar year, the sum of— "(A) the deduction for dividends paid (as defined in section 561) during such calendar year, and "(B) any amount on which tax is imposed under subsection (b)(1) or Ob)(3)(A) of section 857 for any taxable year ending in such calendar year. "(2) INCREASE BY PRIOR YEAR OVERDISTRIBUTION.—The amount determined under paragraph (1) for any calendar year shall be increased by the excess (if any) of—

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