Page:United States Statutes at Large Volume 112 Part 1.djvu/858

 112 STAT. 832 PUBLIC LAW 105-206—JULY 22, 1998 (A) IN GENERAL. — The term "10-percent subsidiary entity" means, with respect to any exempt REIT or stapled entity, any entity in which the exempt REIT or stapled entity (as the case may be) directly or indirectly holds at least a 10-percent interest. (B) EXCEPTION FOR CERTAIN CORPORATION SUBSIDI- ARIES OF REITS.— ^A corporation which would, but for this subparagraph, be treated as a 10-percent subsidiary of an exempt REIT shall not be so treated if such corporation is taxable under section 11 of the Internal Revenue Code of 1986. (C) 10-PERCENT INTEREST.—The term "10-percent interest" means— (i) in the case of an interest in a corporation, ownership of 10 percent (by vote or value) of the stock in such corporation; (ii) in the case of an interest in a partnership, ownership of 10 percent of the capital or profits interest in the partnership; and (iii) in any other case, ownership of 10 percent of the beneficial interests in the entity. (5) OTHER DEFINITIONS. —Terms used in this section which are used in section 269B or section 856 of such Code shall have the respective meanings given such terms by such section, (f) GUIDANCE. — The Secretary may prescribe such guidance as may be necessary or appropriate to carry out the purposes of this section, including guidance to prevent the avoidance of such purposes and to prevent the double counting of income. Applicability. (g) EFFECTIVE DATE. —This section shall apply to taxable years ending after March 26, 1998. SEC. 7003. CERTAIN CUSTOMER RECEIVABLES INELIGIBLE FOR MARK TO MARKET TREATMENT. (a) CERTAIN RECEIVABLES NOT ELIGIBLE FOR MARK TO MAR- KET. — Section 475(c) (relating to definitions) is amended by adding at the end the following new paragraph: "(4) SPECIAL RULES FOR CERTAIN RECEIVABLES. — "(A) IN GENERAL.—Paragraph (2)(C) shall not include any nonfinancial customer paper. "(B) NONFINANCIAL CUSTOMER PAPER.— For purposes of subparagraph (A), the term 'nonfinancial customer paper' means any receivable which— "(i) is a note, bond, debenture, or other evidence of indebtedness; "(ii) arises out of the sale of nonfinancial goods or services by a person the principal activity of which is the selling or providing of nonfinancial goods or services; and "(iii) is held by such person (or a person who bears a relationship to such person described in section 267(b) or 707(b)) at all times since issue.". (b) REGULATIONS.—Section 475(g) is amended by striking "and" at the end of paragraph (1), by striking the period at the end of paragraph (2) and inserting ", and", and by adding at the end the following new paragraph: "(3) to prevent the use by taxpayers of subsection (c)(4) to avoid the application of this section to a receivable that

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