Page:United States Statutes at Large Volume 122.djvu/2922

 12 2 STA T . 2 89 9 PUBLIC LA W 11 0– 289 —J UL Y3 0, 2008 thesal e ordi s p ositio n o f s uc h a transaction , shall not constitute g ross inco m e under paragraphs (2) and ( 3 )tothee x tent that the transaction hedges an y inde b tedness incurred or to be incurred by the trust to ac q uire or carry real estate assets, and ‘ ‘(ii) any income of a real estate in v estment trust from a transaction entered into by the trust primarily to manage ris k of currency fluctuations w ith respect to any item of income or gain described in paragraph (2) or (3) (or any property which generates such income or gain), including gain from the termination of such a transaction, shall not constitute gross income under paragraphs (2) and (3), but only if such transaction is clearly identified as such before the close of the day on which it was acquired, originated, or entered into (or such other time as the S ecretary may pre - scribe) .’ ’. (c) AUTHORI T Y TO EXCL U DEI TE MS O F I N COME F ROM R EI T INCOME TESTS. — Section 856 (c)(5) is amended by adding at the end the following new subparagraph

‘‘( J ) SECRET A RIAL AUTHORITY TO EXCLUDE OTHER ITEMS OF INCOME.—To the extent necessary to carry out the pur- poses of this part, the Secretary is authori z ed to determine, solely for purposes of this part, whether any item of income or gain which— ‘‘(i) does not otherwise qualify under paragraph (2) or (3) may be considered as not constituting gross income for purposes of paragraphs (2) or (3), or ‘‘(ii) otherwise constitutes gross income not quali- fying under paragraph (2) or (3) may be considered as gross income which qualifies under paragraph (2) or (3).’’. SEC.30 3 2 . R E VI SI ON S T O REIT A SSET TESTS. (a) C LARIFICATION OF V ALUATION TEST.—The first sentence in the matter following section 856(c)( 4 )( B )(iii)(III) is amended by inserting ‘‘(including a discrepancy caused solely by the change in the foreign currency exchange rate used to value a foreign asset)’’ after ‘‘such requirements’’. (b) CLARIFICATION OF P ERMISSI B LE ASSET CATE G ORY.—Section 856(c)(5), as amended by section 3 0 3 1 (c), is amended by adding at the end the following new subparagraph: ‘‘( K ) CASH.—If the real estate investment trust or its qualified business unit (as defined in section 9 89) uses any foreign currency as its functional currency (as defined in section 985(b)), the term ‘cash’ includes such foreign currency but only to the extent such foreign currency— ‘‘(i) is held for use in the normal course of the activities of the trust or qualified business unit which give rise to items of income or gain described in para- graph (2) or (3) of subsection (c) or are directly related to acquiring or holding assets described in subsection (c)(4), and ‘‘(ii) is not held in connection with an activity described in subsection (n)(4).’’.

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