Page:United States Statutes at Large Volume 92 Part 3.djvu/217

 PUBLIC LAW 95-600—NOV. 6, 1978

92 STAT. 2849

gain over the deduction for capital gain dividends paid), and "(C) any decrease in the deduction for dividends paid (as defined in section 561) determined without regard to capital 26 USC 561.. gains dividends. "(2) ADJUSTMENT IN THE CASE OF REAL ESTATE INVESTMENT

TRUST.—In the case of any real estate investment trust, the term 'adjustment' means— "(A) any increase in the sum of— "(i) the real estate investment trust taxable income of the real estate investment trust (determined without regard to the deduction for dividends paid (as defined in section 561) and by excluding any net capital gain), and "(ii) the excess of the net income from foreclosure property (as defined in section 857(b)(4)(B)) over the tax 26 USC 857. on such income imposed by section 857(b)(4)(A), "(B) any increase in the amount of the excess described in section 857(b)(3)(A)(ii) (relating to the excess of the net capital gain over the deduction for capital gains dividends paid), and "(C) any decrease in the deduction for dividends paid (as defined in section 561) determined without regard to capital 26 USC 561. gains dividends. "(e) DETERMINATION.—For purposes of this section, the term 'determination'means— "(1) a decision by the Tax Court, or a judgment, decree, or other order by any court of competent jurisdiction, which has become final; "(2) a closing agreement made under section 7121; or 26 USC 7121. "(3) under regulations prescribed by the Secretary, an agreement signed by the Secretary and by, or on behalf of, the qualified investment entity relating to the liability of such entity for tax. "(f) EFFICIENCY DIVIDENDS.—

"(1) DEFINITION.—For purposes of this section, the term 'deficiency dividends' means a distribution of property made by the qualified investment entity on or after the date of the determination and before filing claim under subsection (g), which would have been includible in the computation of the deduction for dividends paid under section 561 for the taxable year with respect to which the liability for tax resulting from the determination exists if distributed during such taxable year. No distribution of property shall be considered as deficiency dividends for purposes of subsection (a) unless distributed within 90 days after the determination, and unless a claim for a deficiency dividend deduction with respect to such distribution is filed pursuant to subsection (g). "(2) LIMITATIONS.— "(A) ORDINARY DIVIDENDS.—The

amount of deficiency dividends (other than deficiency dividends qualifying as capital gain dividends) paid by a qualified investment entity for the taxable year with respect to which the liability for tax resulting from the determination exists shall not exceed the sum of— "(i) the excess of the amount of increase referred to in subparagraph (A) of paragraph (1) or (2) of subsection (d) (whichever applies) over the amount of any increase in the deduction for dividends paid computed without regard to capital gain dividends) for such taxable year which results from such determination, and

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