Page:United States Statutes at Large Volume 107 Part 1.djvu/467

 PUBLIC LAW 103-66—AUG. 10, 1993 107 STAT. 441 able year if more than 50 percent of the gross receipts of such corporation for such taxable year are derived from real property trades or businesses in which the corporation materially participates. "(ii) PERSONAL SERVICES AS AN EMPLOYEE.—For purposes of subparagraph (B), personal services performed as an employee shall not be treated as performed in real property trades or businesses. The preceding sentence shall not apply if such emplovee IS a 5-percent owner (as defined in section 416(i)(lxB)) in the employer." (b) CONFORMING AMENDMENTS.— (1) Paragraph (2) of section 469(c) is amended by striking 26 USC 469. "The" and inserting "Except as provided in paragraph (7), the. (2) Clause (iv) of section 469(i)(3)(E) is amended by inserting "or any loss tillowable by reason of subsection (c)(7)" after •loss". (c) EFFECTIVE DATE. — The amendments made by this section 26 USC 469 note. shall apply to taxable years beginning after December 31, 1993. Subpart C—Provisions Relating to Real Estate Investments by Pension Funds SEC. 13144. REAL ESTATE PROPERTY ACQUIRED BY A QUALIFIED ORGANIZATION. (a) MODIFICATIONS OF EXCEPTIONS.—Paragraph (9) of section 514(c) (relating to real property acquired by a qualined organization) is amended by adding at the end thereof the following new subp£uragraphs: "(G) SPECIAL RULES FOR PURPOSES OF THE EXCEP- TIONS. — Except as otherwise provided by regulations— "(i) SMALL LEASES DISREGARDED. — For purposes of clauses (iii) and (iv) of subparagraph (B), a lease to a person described in such clause (iii) or (iv) shall be disregarded if no more than 25 percent of the leasable floor space in a building (or complex of buildings) is covered by the lease and if the lease is on commercially reasonable terms. "(ii) COMMERCIALLY REASONABLE FINANCING. — Clause (v) of subparagraph (B) shall not apply if the financing is on commercially reasonable terms. "(H) QUALIFYING SALES BY FINANCIAL INSTITUTIONS. — "(i) IN GENERAL.— In the case of a qualifying sale by a financial institution, except as provided in regulations, clauses (i) and (ii) of subparagraph (B) shall not apply with respect to financing provided by such institution for such sale. "(ii) QUALIFYING SALE.— For purposes of this clause, there is a qualifying sale by a financial institution if— "(I) a qualified organization acquires property described in clause (iii) from a financial institution and any gain recognized by the financial institution with respect to the property is ordinary income, "(II) the stated principal amount of the financing provided by the financial institution does not

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