Page:United States Statutes at Large Volume 95.djvu/378

 95 STAT. 352

26 USC 4942 ^°^-

PUBLIC LAW 97-34—AUG. 13, 1981 organization for the taxable year exceed the minimum investment return for the taxable year, clause (ii) of subparagraph (A) shall not apply unless substantially all of such qualifying distributions are made directly for the active conduct of the activities constituting the purpose or function for which it is organized and operated." (b) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after December 31, 1981.

Subtitle D—Other Provisions SEC. Sai. TECHNICAL AMENDMENTS RELATING TO DISPOSITIONS OF INVESTMENT IN UNITED STATES REAL PROPERTY. (a) GENERAL RULE.—

26 USC 897.

26 USC 862.

26 USC 6039e.

(1) Paragraph (l)(A)(i) of section 897(c) (defining United States real property interests) is amended by striking out "United States" and inserting in lieu thereof "United States or the Virgin Islands". (2) Section 862(a) (relating to income from sources without the United States) is amended— (A) by striking out "and" at the end of paragraph (5), (B) by striking out the period at the end of paragraph (6) and inserting in lieu thereof a semicolon, (C) by striking out "Underwriting" in paragraph (7) and inserting in lieu thereof "underwriting", (D) by striking out the period at the end of paragraph (7) and inserting in lieu thereof "; and", and (E) by adding at the end thereof the following new paragraph: "(8) gains, profits, and income from the disposition of a United States real property interest (as defined in section 897(c)) when the real property is located in the Virgin Islands." (3) Section 6039C (relating to returns with respect to United States real property interests) is amended by adding at the end thereof the following new subsection: "(f) SPECIAL RULE FOR UNITED STATES INTEREST AND VIRGIN ISLANDS

INTEREST.—A nonresident alien individual or foreign corporation subject to tax under section 897(a) shall pay any tax and file any return required by this title— "(1) to the United States, in the case of any interest in real property located in the United States and an interest (other than an interest solely as a creditor) in a domestic corporation (with respect to the United States) described in section 897(c)(l)(A)(ii), and "(2) to the Virgin Islands, in the case of an interest in real property located in the Virgin Islands and an interest (other than an interest solely as a creditor) in a domestic corporation (with respect to the Virgin Islands) described in section 897(c)(l)(A)(ii)." (b) PARTNERSHIP ASSETS.—Paragraph (4)(B) of section 897(c) is amended to read as follows: "(B) ASSETS HELD BY PARTNERSHIPS, ETC.—Under regula-

tions prescribed by the Secretary, assets held by a partnership, trust, or estate shall be treated as held proportionately by its partners or beneficiaries. Any asset treated as held by a partner or beneficiary by reason of this subparagraph which is used or held for use by the partnership, trust, or estate in a trade or business shall be treated as so used or

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