Page:United States Statutes at Large Volume 113 Part 3.djvu/423

 PUBLIC LAW 106-170—DEC. 17, 1999 113 STAT. 1941 "(I) not more than 5 percent of the value of its total assets is represented by securities of any one issuer, "(II) the trust does not hold securities possessing more than 10 percent of the total voting power of the outstanding securities of any one issuer, and "(III) the trust does not hold securities having a value of more than 10 percent of the total value of the outstanding securities of any one issuer.". (b) EXCEPTION FOR STRAIGHT DEBT SECURITIES.— Subsection (c) of section 856 of such Code is amended by adding at the end the following new paragraph: "(7) STRAIGHT DEBT SAFE HARBOR IN APPLYING PARAGRAPH (4).— Securities of an issuer which are straight debt (as defined in section 1361(c)(5) without regard to subparagraph (B)(iii) thereof) shall not be taken into account in applying paragraph (4)(B)(ii)(III)if— "(A) the issuer is an individual, or "(B) the only securities of such issuer which are held by the trust or a taxable REIT subsidiary of the trust are straight debt (as so defined), or "(C) the issuer is a partnership and the trust holds at least a 20 percent profits interesit in the partnership.". SEC. 542. TREATMENT OF INCOME AND SERVICES PROVIDED BY TAX- ABLE REIT SUBSIDIARIES. (a) INCOME FROM TAXABLE REIT SUBSIDIARIES NOT TREATED AS IMPERMISSIBLE TENANT SERVICE INCOME.—Clause (i) of section 856(d)(7)(C) of the Internal Revenue Code of 1986 (relating to exceptions to impermissible tenant service income) is amended by inserting "or through a taxable REIT subsidiary of such trust" after "income". (b) CERTAIN INCOME FROM TAXABLE REIT SUBSIDIARIES NOT EXCLUDED FROM RENTS FROM REAL PROPERTY. — (1) IN GENERAL.— Subsection (d) of section 856 of such Code (relating to rents from real property defined) is amended by adding at the end the following new paragraphs: "(8) SPECL\L RULE FOR TAXABLE REIT SUBSIDIARIES.— For purposes of this subsection, amounts paid to a real estate investment trust by a taxable REIT subsidiary of such trust shall not be excluded from rents from real property by reason of paragraph (2)(B) if the requirements of either of the following subparagraphs are met: "(A) LIMITED RENTAL EXCEPTION.—The requirements of this subparagraph are met with respect to any property if at least 90 percent of the leased space of the property is rented to persons other than taxable REIT subsidiaries of such trust and other than persons described in section 856(d)(2)(B). The preceding sentence shall apply only to the extent that the amounts paid to the trust as rents from real property (as defined in paragraph (1) without regard to paragraph (2)(B)) from such property are substantially comparable to such rents made by the other tenants of the trust's property for comparable space. " (B) EXCEPTION FOR CERTAIN LODGING FACILITIES. — The requirements of this subparagraph are met with respect to an interest in real property which is a qualified

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