Page:United States Statutes at Large Volume 113 Part 3.djvu/430

 113 STAT. 1948 PUBLIC LAW 106-170—DEC. 17, 1999 Subpart B—Health Care REITs SEC. 551. HEALTH CARE REITS. (a) SPECIAL FORECLOSURE RULE FOR HEALTH CARE PROP- ERTIES. — Subsection (e) of section 856 of the Internal Revenue Code 26 USC 856. of 1986 (relating to special rules for foreclosure property) is amended by adding at the end the following new paragraph: "(6) SPECIAL RULE FOR QUALIFIED HEALTH CARE PROP- ERTIES.— For purposes of this subsection— "(A) ACQUISITION AT EXPIRATION OF LEASE.— The term 'foreclosure property' shall include any qualified health care property acquired by a real estate investment trust as the result of the termination of a lease of such property (other than a termination by reason of a default, or the imminence of a default, on the lease). "(B) GRACE PERIOD.— In the case of a qualified health care property which is foreclosure property solely by reason of subparagraph (A), in lieu of applying paragraphs (2) and (3)— "(i) the qualified health care property shall cease to be foreclosure property as of the close of the second taxable year after the taxable year in which such trust acquired such property, and "(ii) if the real estate investment trust establishes to the satisfaction of the Secretary that an extension of the grace period in clause (i) is necessary to the orderly leasing or liquidation of the trust's interest in such qualified health care property, the Secretary may grant one or more extensions of the grace period for such qualified health care property. Any such extension shall not extend the grace period beyond the close of the 6th year after the taxable year in which such trust acquired such qualified health care property. " (C) INCOME FROM INDEPENDENT CONTRACTORS. —For purposes of applying paragraph (4)(C) with respect to qualified health care property which is foreclosure property by reason of subparagraph (A) or paragraph (1), income derived or received by the trust from an independent contractor shall be disregarded to the extent such income is attributable to— "(i) any lease of property in effect on the date the real estate investment trust acquired the qualified health care property (without regard to its renewal after such date so long as such renewal is pursuant to the terms of such lease as in effect on such date), or "(ii) any lease of property entered into after such date if— "(I) on such date, a lease of such property from the trust was in effect, and "(II) under the terms of the new lease, such trust receives a substantially similar or lesser benefit in comparison to the lease referred to in subclause (I). " (D) QUALIFIED HEALTH CARE PROPERTY.—

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