SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Real Estate Investment and Jobs Act 
of 2014''.

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

    (a) In General.--Paragraph (3) of section 897(c) of the Internal 
Revenue Code of 1986 is amended--
            (1) by striking all that precedes ``If any class'' and 
        inserting the following:
            ``(3) Exceptions for certain stock.--
                    ``(A) Exception for stock regularly traded on 
                established securities markets.--'',
            (2) by inserting before the period the following: ``. In 
        the case of any class of stock of a real estate investment 
        trust, the preceding sentence shall be applied by substituting 
        `10 percent' for `5 percent''', and
            (3) by adding at the end the following new subparagraph:
                    ``(B) Exception for certain stock in real estate 
                investment trusts.--
                            ``(i) In general.--Stock of a real estate 
                        investment trust held by a qualified 
                        shareholder shall not be treated as a United 
                        States real property interest except to the 
                        extent that an investor in the qualified 
                        shareholder (other than an investor that is a 
                        qualified shareholder) holds more than 10 
                        percent of the stock of such real estate 
                        investment trust (determined by applying the 
                        constructive ownership rules of section 
                        897(c)(6)(C)).
                            ``(ii) Qualified shareholder.--For purposes 
                        of this subparagraph, the term `qualified 
                        shareholder' means an entity--
                                    ``(I) that is eligible for benefits 
                                of a comprehensive income tax treaty 
                                with the United States which includes 
                                an exchange of information program,
                                    ``(II) that is a qualified 
                                collective investment vehicle,
                                    ``(III) whose principal class of 
                                interests is listed and regularly 
                                traded on one or more recognized stock 
                                exchanges (as defined in such 
                                comprehensive income tax treaty), and
                                    ``(IV) that maintains records on 
                                the identity of each person who, at any 
                                time during the qualified shareholder's 
                                taxable year, is the direct owner of 5 
                                percent or more of the class of 
                                interest described in clause (III).
                            ``(iii) Qualified collective investment 
                        vehicle.--For purposes of this subparagraph, 
                        the term `qualified collective investment 
                        vehicle' means an entity that--
                                    ``(I) would be eligible for a 
                                reduced rate of withholding under such 
                                comprehensive income tax treaty with 
                                respect to ordinary dividends paid by a 
                                real estate investment trust, even if 
                                such entity holds more than 10 percent 
                                of the stock of such real estate 
                                investment trust, or
                                    ``(II) is designated as a qualified 
                                collective investment vehicle by the 
                                Secretary and is either--
                                            ``(aa) fiscally transparent 
                                        within the meaning of section 
                                        894, or
                                            ``(bb) required to include 
                                        dividends in its gross income, 
                                        but is entitled to a deduction 
                                        for distributions to its 
                                        investors.''.
    (b) Distributions by Real Estate Investment Trusts.--Paragraph (1) 
of section 897(h) of the Internal Revenue Code of 1986 is amended--
            (1) by inserting ``(10 percent in the case of stock of a 
        real estate investment trust)'' after ``5 percent of such class 
        of stock'', and
            (2) by inserting ``, and any distribution to a qualified 
        shareholder (as defined in subsection (c)(3)(B)(ii)) shall not 
        be treated as gain recognized from the sale or exchange of a 
        United States real property interest to the extent that the 
        stock of the real estate investment trust held by such 
        qualified shareholder is not treated as a United States real 
        property interest under subsection (c)(3)(B)'' before the 
        period at the end of the second sentence.
    (c) Definition.--Subparagraph (B) of section 897(h)(4) of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following: ``In determining whether a qualified investment entity is 
domestically controlled--
                            ``(i) a qualified investment entity shall 
                        be permitted to presume that stock held by a 
                        holder of less than 5 percent of a class of 
                        stock regularly traded on an established 
                        securities market in the United States is held 
                        by United States persons throughout the testing 
                        period except to the extent that the qualified 
                        investment entity has actual knowledge 
                        regarding stock ownership,
                            ``(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 
                                stock exchange, 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 
                        unless such other qualified investment entity 
                        is domestically controlled (as determined under 
                        this subparagraph) in which case 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 to 
                        the extent that the stock of such other 
                        qualified investment entity is (or is treated 
                        under this subparagraph as) held by a United 
                        States person.''.
    (d) Conforming Amendment.--Subparagraph (C) of section 897(c)(6) of 
the Internal Revenue Code of 1986 is amended--
            (1) by striking ``more than 5 percent'' and inserting 
        ``more than 5 or 10 percent, whichever is applicable,'', and
            (2) by striking ``substituting `5 percent' for `50 
        percent')'' and inserting ``substituting `5 percent or 10 
        percent, whichever is applicable' for `50 percent')''.
    (e) Effective Dates.--
            (1) In general.--The amendments made by subsection (a) 
        shall apply to dispositions on and after the date of the 
        enactment of this Act.
            (2) Distributions.--The amendments made by subsection (b) 
        shall apply to 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.
            (3) Definitions.--The amendments made by subsections (c) 
        and (d) shall take effect on the date of the enactment of this 
        Act.

SEC. 3. UNITED STATES REAL PROPERTY INTEREST.

    (a) United States Real Property Interest.--Subparagraph (B) of 
section 897(c)(1) of the Internal Revenue Code of 1986 is amended by 
striking all that precedes ``(i) as of the date of the disposition'' 
and inserting the following:
                    ``(B) Exclusion for interest in certain 
                corporations.--The term `United States real property 
                interest' does not include any interest in a 
                corporation (other than a qualified investment entity 
                (as defined in subsection (h)(4)(A)(i)) if--''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 4. REQUIRED NOTIFICATION OF FIRPTA STATUS.

    (a) In General.--Section 6039C of the Internal Revenue Code of 1986 
is amended by redesignating subsection (d) as subsection (e) and by 
inserting after subsection (c) the following new subsection:
    ``(d) Required Notification of Status as United States Real 
Property Holding Corporation; Presumption of Foreign Control for 
Qualified Investment Entities.--
            ``(1) Required notification of status as united states real 
        property holding corporation.--Any United States real property 
        holding corporation (as defined in section 897(c)(2)) is hereby 
        required to make its status as a United States real property 
        holding corporation readily accessible, and in the case of a 
        publicly traded corporation, publicly available. Under 
        regulations prescribed by the Secretary, such notifications may 
        include disclosure of such status on Form 1099s sent to 
        shareholders, in annual reports, on websites, and, in the case 
        of privately held corporations, on stock certificates.
            ``(2) Presumption of foreign control of qualified 
        investment entities.--In the absence of disclosure to the 
        contrary (in such form and manner as the Secretary may 
        prescribe), any qualified investment entity (as defined in 
        section 897(h)(4)(A)) will be presumed for purposes of section 
        897 to be foreign controlled.
            ``(3) Penalty for failure to make notification of status.--
        The penalty provided under section 6721 shall apply to any 
        failure to comply with the requirements of paragraph (1), with 
        the following modifications--
                    ``(A) in the case of a corporation other than a 
                corporation which meets the gross receipts test of 
                section 6721(d)(2), the minimum penalty imposed under 
                such section shall be equal to the maximum penalty 
                provided under section 6721(a)(1),
                    ``(B) in the case of a corporation which holds 
                United States real estate with a gross fair market 
                value of at least $1,000,000,000--
                            ``(i) the minimum penalty imposed under 
                        such section shall be equal to $5,000,000, and
                            ``(ii) in the case of an intentional 
                        failure, the minimum penalty imposed under such 
                        section shall be the greater of the penalty 
                        provided under section 6721(e) or 
                        $10,000,000.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 5. REQUIRE FIRPTA WITHHOLDING BY BROKERS ON SALES BY SHAREHOLDERS 
              OWNING A MORE THAN 5 PERCENT INTEREST.

    (a) In General.--Section 1445(e) of the Internal Revenue Code of 
1986 is amended by redesignating paragraph (7) as paragraph (8) and by 
inserting after paragraph (6) the following new paragraph:
            ``(7) Broker withholding obligation on certain dispositions 
        of nondomestically controlled united states real property 
        holding corporations.--
                    ``(A) In general.--In the case of any disposition 
                of an interest in a United States real property holding 
                corporation (as defined in section 897(c)(2)) involving 
                a broker (as defined in section 6045(c)), such broker 
                shall be required to deduct and withhold a tax equal to 
                10 percent of the amount realized on the disposition.
                    ``(B) Exceptions.--
                            ``(i) Domestic qualified investment 
                        entities and real estate investment trusts.--
                        Subparagraph (A) shall not apply to sales of 
                        stock of a domestically controlled qualified 
                        investment entity (as defined in section 
                        897(h)(4)) or stock of a real estate investment 
                        trust that is not treated as a United States 
                        real property interest pursuant to section 
                        897(c)(3)(B).
                            ``(ii) Greater than 5 percent interest in 
                        united states real property holding 
                        corporation.--Subparagraph (A) shall not apply 
                        if the transferee held a greater than 5 percent 
                        interest (or in the case of the disposition of 
                        any class of stock of a real estate investment 
                        trust that is regularly traded on an 
                        established securities market, a greater than 
                        10 percent interest) in the United States real 
                        property holding corporation. In determining 
                        whether that threshold is met, brokers are 
                        permitted to rely on public statements made by 
                        public companies, including statements related 
                        to the status of the company as a United States 
                        real property holding corporation or as a 
                        domestically controlled qualified investment 
                        entity.
                            ``(iii) Lack of broker knowledge.--
                        Subparagraph (A) shall apply only if the broker 
                        had actual knowledge (or reasonably should have 
                        known) of their withholding obligation.''.
    (b) Conforming Amendment.--Section 1445(b)(6) of the Internal 
Revenue Code of 1986 is amended by striking ``This paragraph'' and 
inserting ``Except as provided in subsection (e)(7), this paragraph''.
    (c) Effective Date.--The amendments made by this section shall 
apply to dispositions after the date of the enactment of this Act.

SEC. 6. INTERESTS IN RICS AND REITS NOT EXCLUDED FROM DEFINITION OF 
              UNITED STATES REAL PROPERTY INTERESTS.

    (a) In General.--Section 897(c)(1)(B) of the Internal Revenue Code 
of 1986 is amended by striking ``and'' at the end of clause (i), by 
striking the period at the end of clause (ii)(II) and inserting ``, 
and'', and by adding at the end the following new clause:
                            ``(iii) neither such corporation nor any 
                        predecessor of such corporation was a regulated 
                        investment company or a real estate investment 
                        company at any time during the period described 
                        in subparagraph (A)(ii).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to dispositions after the date of the enactment of this Act.

SEC. 7. DIVIDENDS DERIVED FROM RICS AND REITS INELIGIBLE FOR DEDUCTION 
              FOR UNITED STATES SOURCE PORTION OF DIVIDENDS FROM 
              CERTAIN FOREIGN CORPORATIONS.

    (a) In General.--Section 245(a) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new paragraph:
            ``(12) Dividends derived from rics and reits ineligible for 
        deduction.--Regulated investment companies and real estate 
        investment trusts shall not be treated as domestic corporations 
        for purposes of paragraph (5)(B).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to dividends received from regulated investment companies and real 
estate investment trusts on or after the date of the enactment of this 
Act.
Real Estate Investment and Jobs Act of 2014 - Amends the Internal Revenue Code to: (1) increase from 5% to 10% the allowable ownership interest in real estate investment trust (REIT) stock for purposes of tax exemptions allowed by the Foreign Investment in Real Property Tax Act (FIRPTA) relating to foreign investment in U.S. real property interests; (2) require a U.S. real property holding corporation to make its status readily accessible and publicly available; (3) require brokers who sell an interest in a U.S. real property holding corporation to deduct and withhold 10% on the amount realized from the sale, with specified exceptions; (4) include regulated investment companies (RICs) and real estate investment companies (REITs) in the definition of U.S. real property interests; and (5) deny dividends derived from RICs and REITs a tax deduction for the U.S. source portion of dividends from certain foreign corporations.
Real Estate Investment and Jobs Act of 2014