Page:United States Statutes at Large Volume 117.djvu/782

 PUBLIC LAW 108–27—MAY 28, 2003

117 STAT. 763

(d) TREATMENT OF DIVIDENDS RECEIVED FROM REAL ESTATE INVESTMENT TRUSTS.—Section 857(c) (relating to restrictions applicable to dividends received from real estate investment trusts) is amended to read as follows: ‘‘(c) RESTRICTIONS APPLICABLE TO DIVIDENDS RECEIVED FROM REAL ESTATE INVESTMENT TRUSTS.— ‘‘(1) SECTION 243.—For purposes of section 243 (relating to deductions for dividends received by corporations), a dividend received from a real estate investment trust which meets the requirements of this part shall not be considered a dividend. ‘‘(2) SECTION 1(h)(11).—For purposes of section 1(h)(11) (relating to maximum rate of tax on dividends)— ‘‘(A) rules similar to the rules of subparagraphs (B) and (C) of section 854(b)(1) shall apply to dividends received from a real estate investment trust which meets the requirements of this part, and ‘‘(B) for purposes of such rules, such a trust shall be treated as receiving qualified dividend income during any taxable year in an amount equal to the sum of— ‘‘(i) the excess of real estate investment trust taxable income computed under section 857(b)(2) for the preceding taxable year over the tax payable by the trust under section 857(b)(1) for such preceding taxable year, and ‘‘(ii) the excess of the income subject to tax by reason of the application of the regulations under section 337(d) for the preceding taxable year over the tax payable by the trust on such income for such preceding taxable year.’’. (e) CONFORMING AMENDMENTS.— (1) Paragraph (3) of section 1(h), as redesignated by section 301, is amended to read as follows: ‘‘(3) ADJUSTED NET CAPITAL GAIN.—For purposes of this subsection, the term ‘adjusted net capital gain’ means the sum of— ‘‘(A) net capital gain (determined without regard to paragraph (11)) reduced (but not below zero) by the sum of— ‘‘(i) unrecaptured section 1250 gain, and ‘‘(ii) 28-percent rate gain, plus ‘‘(B) qualified dividend income (as defined in paragraph (11)).’’. (2) Subsection (f) of section 301 is amended adding at the end the following new paragraph: ‘‘(4) For taxation of dividends received by individuals at capital gain rates, see section 1(h)(11).’’. (3) Paragraph (1) of section 306(a) is amended by adding at the end the following new subparagraph: ‘‘(D) TREATMENT AS DIVIDEND.—For purposes of section 1(h)(11) and such other provisions as the Secretary may specify, any amount treated as ordinary income under this paragraph shall be treated as a dividend received from the corporation.’’. (4)(A) Subpart C of part II of subchapter C of chapter 1 (relating to collapsible corporations) is repealed. (B)(i) Section 338(h) is amended by striking paragraph (14).

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