I 

111TH CONGRESS 

2D SESSION H. R. 4539 

To amend the Internal Revenue Code of 1986 to modify the treatment 

of foreign investments in United States real property, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 27, 2010 

Mr. CROWLEY (for himself, Ms. BEAN, and Mr. TIBERI) introduced the 

following bill; which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to modify 

the treatment of foreign investments in United States 

real property, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Real Estate Revitaliza5 tion Act of 2010’’. 

6 SEC. 2. TREATMENT OF FOREIGN INVESTMENTS IN UNITED 

7 STATES REAL PROPERTY. 

8 (a) INTEREST IN DOMESTIC CORPORATION NOT A

9 UNITED STATES REAL PROPERTY INTEREST.—SubVerDate Nov 24 2008 21:48 Jan 28, 2010 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4539.IH H4539

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1 section (c) of section 897 of the Internal Revenue Code 

2 of 1986 is amended to read as follows: 

3 ‘‘(c) UNITED STATES REAL PROPERTY INTEREST.— 

4 For purposes of this section— 

5 ‘‘(1) IN GENERAL.—The term ‘United States 

6 real property interest’ means an interest in real 

7 property (including an interest in a mine, well, or 

8 other natural deposit) located in the United States 

9 or the Virgin Islands. 

10 ‘‘(2) OTHER SPECIAL RULES.— 

11 ‘‘(A) INTEREST IN REAL PROPERTY.—The 

12 term ‘interest in real property’ includes fee 

13 ownership and co-ownership of land or improve14 ments thereon, leaseholds of land or improve15 ments thereon, options to acquire land or im16 provements thereon, and options to acquire 

17 leaseholds of land or improvements thereon. 

18 ‘‘(B) REAL PROPERTY INCLUDES ASSOCI19 ATED PERSONAL PROPERTY.—The term ‘real 

20 property’ includes movable walls, furnishings, 

21 and other personal property associated with the 

22 use of the real property.’’. 

23 (b) RULES FOR CERTAIN INVESTMENT ENTITIES.— 

24 Section 897(h) of such Code is amended to read as follows: 


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1 ‘‘(h) SPECIAL RULES FOR CERTAIN INVESTMENT

2 ENTITIES.—For purposes of this section— 

3 ‘‘(1) LOOK-THROUGH OF DISTRIBUTIONS.—Any 

4 distribution by a qualified investment entity to a 

5 nonresident alien individual or a foreign corporation 

6 shall, to the extent attributable to gain from sales or 

7 exchanges by the qualified investment entity (includ8 ing as a result of sales or exchanges by a lower-tier 

9 qualified investment entity) of United States real 

10 property interests, be included in such foreign per11 son’s gross income as an ordinary dividend from the 

12 qualified investment entity. 

13 ‘‘(2) LIQUIDATING DISTRIBUTIONS.—In the 

14 event of a liquidating distribution, the lesser of— 

15 ‘‘(A) gain recognized under section 331, or 

16 ‘‘(B) the amount that would be treated as 

17 an ordinary dividend pursuant to paragraph 

18 (1), 

19 shall be treated as an ordinary dividend. 

20 ‘‘(3) PARTNERSHIPS.—For purposes of this 

21 paragraph, a qualified investment entity shall be 

22 deemed to own its proportionate share of each of the 

23 assets of any partnership (as defined in section 

24 7701(a)(2)) in which the qualified investment entity 

25 has an interest as a partner. 


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1 ‘‘(4) QUALIFIED INVESTMENT ENTITY.—The 

2 term ‘qualified investment entity’ means any real es3 tate investment trust and any regulated investment 

4 company.’’. 

5 (c) REPEAL OF THE ELECTION BY A FOREIGN COR6 PORATION TO BE TREATED AS A DOMESTIC CORPORA7 TION.—Section 897 of such Code is amended by striking 

8 subsection (i). 

9 (d) CONFORMING AMENDMENTS.— 

10 (1) Section 852(b)(3)(E) of such Code is 

11 amended by striking ‘‘to which section 897 does not 

12 apply by reason of the second sentence of section 

13 897(h)(1)’’ and inserting ‘‘described in section 

14 897(h)(1)’’. 

15 (2) Section 857(b)(3)(F) of such Code is 

16 amended by striking ‘‘In the case of a shareholder 

17 of a real estate investment trust to whom section 

18 897 does not apply by reason of the second sentence 

19 of section 897(h)(1)’’ and inserting ‘‘In the case of 

20 a distribution described in section 897(h)(1) to a 

21 shareholder of a real estate investment trust’’. 

22 (3) Section 871(k)(2)(E) of such Code is 

23 amended by striking ‘‘to which section 897 does not 

24 apply by reason of the second sentence of section 


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1 897(h)(1)’’ and inserting ‘‘described in section 

2 897(h)(1)’’. 

3 (4) Section 884(d)(2) of such Code is amended 

4 by striking subparagraph (C) and redesignating sub5 paragraphs (D) and (E) as subparagraphs (C) and 

6 (D), respectively. 

7 (5)(A) Section 1445(b) of such Code is amend8 ed by striking paragraphs (3), (6), and (8) and by 

9 redesignating paragraphs (4), (5), (7), and (9) as 

10 paragraphs (3), (4), (5), and (6), respectively. 

11 (B) Section 1445(d)(1)(A) of such Code is 

12 amended by striking ‘‘or a domestic corporation fur13 nishes the transferee an affidavit described in para14 graph (3) of subsection (b)’’. 

15 (C) Section 1445(e) of such Code is amended 

16 by striking paragraphs (3) and (6) and by redesig17 nating paragraphs (4), (5), and (7) as paragraphs 

18 (3), (4), and (5), respectively. 

19 (6) Paragraphs (1) and (2) of section 6039C(d) 

20 of such Code are amended to read as follows: 

21 ‘‘(1) to the United States, in the case of any in22 terest in real property located in the United States, 

23 and 


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1 ‘‘(2) to the Virgin Islands, in the case of any 

2 interest in real property located in the Virgin Is3 lands.’’. 

4 (e) EFFECTIVE DATE.—The amendments made by 

5 this section shall apply to taxable years beginning after 

6 December 31, 2009. 

Æ 


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