Real Estate Investment and Jobs Act of 2015

Summary: Real Estate Investment and Jobs Act of 2015 This bill amends the Internal Revenue Code to increase from 5% to 10% the stock ownership threshold in a real estate investment trust for purposes of exempting proceeds from dispositions of such stock from withholding requirements under the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA). Exempts from FIRPTA withholding requirements U.S. real property interests held by: (1) a qualified foreign pension fund created or organized outside the United States, or (2) any entity all of the interests of which are held by a qualified foreign pension fund. 

SECTION 1. SHORT TITLE; ETC.

    (a) Short Title.--This Act may be cited as the ``Real Estate 
Investment and Jobs Act of 2015''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.

SEC. 2. EXCEPTION FROM FIRPTA FOR CERTAIN STOCK OF REAL ESTATE 
              INVESTMENT TRUSTS.

    (a) Modifications of Ownership Rules.--
            (1) In general.--Section 897 is amended by adding at the 
        end the following new subsection:
    ``(k) Special Rules Relating to Real Estate Investment Trusts.--
            ``(1) Increase in percentage ownership for exceptions for 
        persons holding publicly traded stock.--
                    ``(A) Dispositions.--In the case of any disposition 
                of stock in a real estate investment trust, paragraphs 
                (3) and (6)(C) of subsection (c) shall each be applied 
                by substituting `more than 10 percent' for `more than 5 
                percent'.
                    ``(B) Distributions.--In the case of any 
                distribution from a real estate investment trust, 
                subsection (h)(1) shall be applied by substituting `10 
                percent' for `5 percent'.
            ``(2) Stock held by qualified shareholders not treated as 
        usrpi.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B)--
                            ``(i) stock of a real estate investment 
                        trust which is held directly by a qualified 
                        shareholder shall not be treated as a United 
                        States real property interest, and
                            ``(ii) notwithstanding subsection (h)(1), 
                        any distribution to a qualified shareholder 
                        shall not be treated as gain recognized from 
                        the sale or exchange of a United States real 
                        property interest to the extent the stock of 
                        the real estate investment trust held by such 
                        qualified shareholder is not treated as a 
                        United States real property interest under 
                        clause (i).
                    ``(B) Exception.--In the case of a qualified 
                shareholder with 1 or more applicable investors--
                            ``(i) subparagraph (A)(i) shall not apply 
                        to so much of the stock of a real estate 
                        investment trust held by a qualified 
                        shareholder as bears the same ratio to the 
                        value of the interests (other than interests 
                        held solely as a creditor) held by such 
                        applicable investors in the qualified 
                        shareholder bears to value of all interests 
                        (other than interests held solely as a 
                        creditor) in the qualified shareholder, and
                            ``(ii) a percentage equal to the ratio 
                        determined under clause (i) of the amounts 
                        realized by the qualified shareholder with 
                        respect to any disposition of stock in the real 
                        estate investment trust or with respect to any 
                        distribution from the real estate investment 
                        trust attributable to gain from sales or 
                        exchanges of a United States real property 
                        interest shall be treated as amounts realized 
                        from the disposition of United States real 
                        property interests.
                    ``(C) Applicable investor.--For purposes of this 
                paragraph, the term `applicable investor' means, with 
                respect to any qualified shareholder holding stock in a 
                real estate investment trust, a person (other than a 
                qualified shareholder) which--
                            ``(i) holds an interest (other than an 
                        interest solely as a creditor) in such 
                        qualified shareholder, and
                            ``(ii) holds more than 10 percent of the 
                        stock of such real estate investment trust 
                        (whether or not by reason of the person's 
                        ownership interest in the qualified 
                        shareholder).
                    ``(D) Constructive ownership rules.--For purposes 
                of subparagraphs (B)(i) and (C), the constructive 
                ownership rules under subsection (c)(6)(C) shall apply.
            ``(3) Qualified shareholder.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified shareholder' 
                means a foreign person--
                            ``(i) which is eligible for benefits of a 
                        comprehensive income tax treaty with the United 
                        States which includes an exchange of 
                        information program,
                            ``(ii) which is a qualified collective 
                        investment vehicle,
                            ``(iii) the principal class of interests of 
                        which is listed and regularly traded on 1 or 
                        more recognized stock exchanges (as defined in 
                        such comprehensive income tax treaty), and
                            ``(iv) which maintains records on the 
                        identity of each person who, at any time during 
                        the foreign person's taxable year, holds 
                        directly 5 percent or more of the class of 
                        interest described in clause (iii).
                    ``(B) Qualified collective investment vehicle.--For 
                purposes of this subsection, the term `qualified 
                collective investment vehicle' means a foreign person--
                            ``(i) which, under the comprehensive income 
                        tax treaty described in subparagraph (A)(i), is 
                        eligible for a reduced rate of withholding with 
                        respect to ordinary dividends paid by a real 
                        estate investment trust even if such person 
                        holds more than 10 percent of the stock of such 
                        real estate investment trust, or
                            ``(ii) which is designated as a qualified 
                        collective investment vehicle by the Secretary 
                        and is either--
                                    ``(I) fiscally transparent within 
                                the meaning of section 894, or
                                    ``(II) required to include 
                                dividends in its gross income, but 
                                entitled to a deduction for 
                                distributions to persons holding 
                                interests (other than interests solely 
                                as a creditor) in such foreign 
                                person.''.
            (2) Conforming amendments.--
                    (A) Section 897(c)(1)(A) is amended by inserting 
                ``or subsection (k)'' after ``subparagraph (B)'' in the 
                matter preceding clause (i).
                    (B) Section 857(b)(3)(F) is amended by inserting 
                ``or section 897(k)(2)(A)(ii)'' after ``897(h)(1)''.
    (b) Determination of Domestic Control.--
            (1) Special ownership rules.--
                    (A) In general.--Section 897(h)(4) is amended by 
                adding at the end the following new subparagraph:
                    ``(E) Special ownership rules.--For purposes of 
                determining the holder of stock under subparagraphs (B) 
                and (C)--
                            ``(i) in the case of any class of stock of 
                        the qualified investment entity which is 
                        regularly traded on an established securities 
                        market in the United States, a person holding 
                        less than 5 percent of such class of stock at 
                        all times during the testing period shall be 
                        treated as a United States person unless the 
                        qualified investment entity has actual 
                        knowledge that such person is not a United 
                        States person,
                            ``(ii) any stock in the qualified 
                        investment entity held by another qualified 
                        investment entity--
                                    ``(I) any class of stock of which 
                                is regularly traded on an established 
                                securities market, or
                                    ``(II) which is a regulated 
                                investment company which issues 
                                redeemable securities (within the 
                                meaning of section 2 of the Investment 
                                Company Act of 1940),
                        shall be treated as held by a foreign person, 
                        except that if such other qualified investment 
                        entity is domestically controlled (determined 
                        after application of this subparagraph), such 
                        stock shall be treated as held by a United 
                        States person, and
                            ``(iii) any stock in the qualified 
                        investment entity held by any other qualified 
                        investment entity not described in subclause 
                        (I) or (II) of clause (ii) shall only be 
                        treated as held by a United States person in 
                        proportion to the stock of such other qualified 
                        investment entity which is (or is treated under 
                        clause (ii) or (iii) as) held by a United 
                        States person.''.
                    (B) Conforming amendment.--The heading for 
                paragraph (4) of section 897(h) is amended by inserting 
                ``and special rules'' after ``Definitions''.
            (2) Technical amendment.--Clause (ii) of section 
        897(h)(4)(A) is amended by inserting ``and for purposes of 
        determining whether a real estate investment trust is a 
        domestically controlled qualified investment entity under this 
        subsection'' after ``real estate investment trust''.
    (c) Effective Dates.--
            (1) In general.--The amendments made by subsection (a) 
        shall take effect on the date of enactment and shall apply to--
                    (A) any disposition on and after the date of the 
                enactment of this Act, and
                    (B) any distribution by a real estate investment 
                trust on or after the date of the enactment of this Act 
                which is treated as a deduction for a taxable year of 
                such trust ending after such date.
            (2) Determination of domestic control.--The amendments made 
        by subsection (b)(1) shall take effect on the date of the 
        enactment of this Act.
            (3) Technical amendment.--The amendment made by subsection 
        (b)(2) shall take effect on January 1, 2015.

SEC. 3. EXCEPTION FOR INTERESTS HELD BY FOREIGN RETIREMENT OR PENSION 
              FUNDS.

    (a) In General.--Section 897, as amended by section 2, is amended 
by adding at the end the following new subsection:
    ``(l) Exception for Interests Held by Foreign Pension Funds.--
            ``(1) In general.--This section shall not apply to any 
        United States real property interest held by--
                    ``(A) a qualified foreign pension fund, or
                    ``(B) any entity all of the interests of which are 
                held by a qualified foreign pension fund.
            ``(2) Qualified foreign pension fund.--For purposes of this 
        subsection, the term `qualified foreign pension fund' means any 
        trust, corporation, or other organization or arrangement--
                    ``(A) which is created or organized under the law 
                of a country other than the United States,
                    ``(B) which is established to provide retirement or 
                pension benefits to participants or beneficiaries that 
                are current or former employees (or persons designated 
                by such employees) of one or more employers in 
                consideration for services rendered,
                    ``(C) which does not have a single participant or 
                beneficiary with a right to more than five percent of 
                its assets or income,
                    ``(D) which is subject to government regulation and 
                provides annual information reporting about its 
                beneficiaries to the relevant tax authorities in the 
                country in which it is established or operates, and
                    ``(E) with respect to which, under the laws of the 
                country in which it is established or operates--
                            ``(i) contributions to such trust, 
                        corporation, organization, or arrangement which 
                        would otherwise be subject to tax under such 
                        laws are deductible or excluded from the gross 
                        income of such entity or taxed at a reduced 
                        rate, or
                            ``(ii) taxation of any investment income of 
                        such trust, corporation, organization or 
                        arrangement is deferred or such income is taxed 
                        at a reduced rate.
            ``(3) Regulations.--The Secretary shall prescribe such 
        regulations as may be necessary or appropriate to carry out the 
        purposes of this subsection.''.
    (b) Exemption From Withholding.--Section 1445(f)(3) is amended by 
striking ``any person'' and all that follows and inserting the 
following: ``any person other than--
                    ``(A) a United States person, and
                    ``(B) except as otherwise provided by the 
                Secretary, an entity with respect to which section 897 
                does not apply by reason of subsection (l) thereof.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to dispositions and distributions after the date of the enactment 
of this Act.