Page:United States Statutes at Large Volume 111 Part 1.djvu/1056

 Ill STAT. 1032 PUBLIC LAW 105-34—AUG. 5, 1997 property, any amount received or accrued directly or indirectly by the real estate investment trust for— "(i) services furnished or rendered by the trust to the tenants of such property, or "(ii) managing or operating such property. "(B) DISQUALIFICATION OF ALL AMOUNTS WHERE MORE THAN DE MINIMIS AMOUNT.—If the amount described in subparagraph (A) with respect to a property for any taxable year exceeds 1 percent of all amounts received or accrued during such taxable year directly or indirectly by the real estate investment trust with respect to such property, the impermissible tenant service income of the trust with respect to the property shall include all such amounts. "(C) EXCEPTIONS.— For purposes of subparagraph (A)— "(i) services furnished or rendered, or management or operation provided, through an independent contractor from whom the trust itself does not derive or receive any income shall not be treated as furnished, rendered, or provided by the trust, and "(ii) there shall not be taken into account any amount which would be excluded from unrelated business taxable income under section 512(b)(3) if received by an organization described in section 511(a)(2). "(D) AMOUNT ATTRIBUTABLE TO IMPERMISSIBLE SERV- ICES.—For purposes of subparagraph (A), the amount treated as received for any service (or management or operation) shall not be less than 150 percent of the direct cost of the trust in furnishing or rendering the service (or providing the management or operation). " (E) COORDINATION WITH LIMITATIONS.— For purposes of paragraphs (2) and (3) of subsection (c), amounts described in subparagraph (A) shall be included in the gross income of the corporation, trust, or association.". SEC. 1253. ATTRroUTION RULES APPLICABLE TO STOCK OWNERSHIP. Section 856(d)(5) (relating to constructive'ownership of stock) is amended by striking "except that" and all that follows and inserting "except that— "(A) '10 percent' shall be substituted for '50 percent' in subparagraph (C) of paragraphs (2) and (3) of section 318(a), and " (B) section 318(a)(3)(A) shall be applied in the case of a partnership by taking into account only partners who own (directly or indirectly) 25 percent or more of the capital interest, or the profits interest, in the partnership.". SEC. 1254. CREDIT FOR TAX PAID BY REIT ON RETAINED CAPITAL GAINS. (a) GENERAL RULE.—Paragraph (3) of section 857(b) (relating to capital gains) is amended by redesignating subparagraph (D) as subparagraph (E) and by inserting after subparagraph (C) the following new subparagraph: " (D) TREATMENT BY SHAREHOLDERS OF UNDISTRIBUTED CAPITAL GAINS.— "(i) Every shareholder of a real estate investment trust at the close of the trust's taxable year shall include, in computing his long-term capital gains in his return for his taxable year in which the last day

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