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‘‘SEC. 298. AUTHORIZATION OF APPROPRIATIONS.
‘‘(a) IN GENERAL.—There are authorized to be appro-
priated and there are appropriated to the Department of
Agriculture for fiscal years 2000 through 2001, such sums
as may be necessary to carry out the purposes of this chap-
ter not to exceed $100,000,000 for each fiscal year.’’.
‘‘(b) PROPORTIONATE REDUCTION.—If in any year,
the amount appropriated under this chapter is insufficient
to meet the requirements for adjustment assistance payable
under this chapter, the amount of assistance payable under
this chapter shall be reduced proportionately.’’.
(b) CONFORMING AMENDMENT.—The table of contents
for title II of the Trade Act of 1974 is amended by inserting
after the items relating to chapter 5, the following:
‘‘CHAPTER 6—ADJUSTMENT ASSISTANCE FOR FARMERS
‘‘Sec. 291. Definitions.
‘‘Sec. 292. Petitions; group eligibility.
‘‘Sec. 293. Determinations by Secretary.
‘‘Sec. 294. Study by Secretary when International Trade Commission begins in-
vestigation.
‘‘Sec. 295. Benefit information to agricultural commodity producers.
‘‘Sec. 296. Qualifying requirements for agricultural commodity producers.
‘‘Sec. 297. Fraud and recovery of overpayments.
‘‘Sec. 298. Authorization of appropriations.’’.
Subtitle B—Revenue Provisions Re-
lating to Trade Adjustment As-
sistance
SEC. 610. REFERENCE.
Except as otherwise expressly provided, whenever in
this subtitle an amendment or repeal is expressed in terms
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of an amendment to, or repeal of, a section or other provi-
sion, the reference shall be considered to be made to a section
or other provision of the Internal Revenue Code of 1986.
SEC. 611. MODIFICATIONS TO ASSET DIVERSIFICATION
TEST.
(a) IN
GENERAL.—Subparagraph (B) of section
856(c)(4) is amended to read as follows:
‘‘(B)(i) not more than 25 percent of the
value of its total assets is represented by securi-
ties (other than those includible under subpara-
graph (A)),
‘‘(ii) not more than 20 percent of the value
of its total assets is represented by securities of
1 or more taxable REIT subsidiaries, and
‘‘(iii) except with respect to a taxable REIT
subsidiary and securities includible under sub-
paragraph (A)—
‘‘(I) not more than 5 percent of the
value of its total assets is represented by se-
curities of any one issuer,
‘‘(II) the trust does not hold securities
possessing more than 10 percent of the total
voting power of the outstanding securities of
any one issuer, and
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‘‘(III) the trust does not hold securities
having a value of more than 10 percent of
the total value of the outstanding securities
of any one issuer.’’.
(b) EXCEPTION FOR STRAIGHT DEBT SECURITIES.—
Subsection (c) of section 856 is amended by adding at the
end the following new paragraph:
‘‘(7) STRAIGHT DEBT SAFE HARBOR IN APPLYING
PARAGRAPH (4).—Securities of an issuer which are
straight debt (as defined in section 1361(c)(5) without
regard to subparagraph (B)(iii) thereof) shall not be
taken 
into 
account 
in 
applying 
paragraph
(4)(B)(ii)(III) if—
‘‘(A) the issuer is an individual, or
‘‘(B) the only securities of such issuer which
are held by the trust or a taxable REIT sub-
sidiary of the trust are straight debt (as so de-
fined), or
‘‘(C) the issuer is a partnership and the
trust holds at least a 20 percent profits interest
in the partnership.’’.
SEC. 612. TREATMENT OF INCOME AND SERVICES PRO-
VIDED BY TAXABLE REIT SUBSIDIARIES.
(a) INCOME FROM TAXABLE REIT SUBSIDIARIES NOT
TREATED AS IMPERMISSIBLE TENANT SERVICE INCOME.—
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Clause (i) of section 856(d)(7)(C) (relating to exceptions to
impermissible tenant service income) is amended by insert-
ing ‘‘or through a taxable REIT subsidiary of such trust’’
after ‘‘income’’.
(b) CERTAIN INCOME FROM TAXABLE REIT SUBSIDI-
ARIES NOT EXCLUDED FROM RENTS FROM REAL PROP-
ERTY.—
(1) IN GENERAL.—Subsection (d) of section 856
(relating to rents from real property defined) is
amended by adding at the end the following new
paragraphs:
‘‘(8) SPECIAL RULE FOR TAXABLE REIT SUBSIDI-
ARIES.—For purposes of this subsection, amounts
paid to a real estate investment trust by a taxable
REIT subsidiary of such trust shall not be excluded
from rents from real property by reason of paragraph
(2)(B) if the requirements of either of the following
subparagraphs are met:
‘‘(A) LIMITED RENTAL EXCEPTION.—The re-
quirements of this subparagraph are met with
respect to any property if at least 90 percent of
the leased space of the property is rented to per-
sons other than taxable REIT subsidiaries of
such trust and other than persons described in
section 856(d)(2)(B). The preceding sentence
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shall apply only to the extent that the amounts
paid to the trust as rents from real property (as
defined in paragraph (1) without regard to
paragraph (2)(B)) from such property are sub-
stantially comparable to such rents made by the
other tenants of the trust’s property for com-
parable space.
‘‘(B) EXCEPTION FOR CERTAIN LODGING FA-
CILITIES.—The requirements of this subpara-
graph are met with respect to an interest in real
property which is a qualified lodging facility
leased by the trust to a taxable REIT subsidiary
of the trust if the property is operated on behalf
of such subsidiary by a person who is an eligible
independent contractor.
‘‘(9) ELIGIBLE
INDEPENDENT
CONTRACTOR.—
For purposes of paragraph (8)(B)—
‘‘(A) IN GENERAL.—The term ‘eligible inde-
pendent contractor’ means, with respect to any
qualified lodging facility, any independent con-
tractor if, at the time such contractor enters into
a management agreement or other similar serv-
ice contract with the taxable REIT subsidiary to
operate the facility, such contractor (or any re-
lated person) is actively engaged in the trade or
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business of operating qualified lodging facilities
for any person who is not a related person with
respect to the real estate investment trust or the
taxable REIT subsidiary.
‘‘(B) SPECIAL RULES.—Solely for purposes
of this paragraph and paragraph (8)(B), a per-
son shall not fail to be treated as an independent
contractor with respect to any qualified lodging
facility by reason of any of the following:
‘‘(i) The taxable REIT subsidiary
bears the expenses for the operation of the
facility pursuant to the management agree-
ment or other similar service contract.
‘‘(ii) The taxable REIT subsidiary re-
ceives the revenues from the operation of
such facility, net of expenses for such oper-
ation and fees payable to the operator pur-
suant to such agreement or contract.
‘‘(iii) The real estate investment trust
receives income from such person with re-
spect to another property that is attrib-
utable to a lease of such other property to
such person that was in effect as of the later
of—
‘‘(I) January 1, 1999, or
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‘‘(II) the earliest date that any
taxable REIT subsidiary of such trust
entered into a management agreement
or other similar service contract with
such person with respect to such quali-
fied lodging facility.
‘‘(C) 
RENEWALS, 
ETC., 
OF
EXISTING
LEASES.—For 
purposes 
of 
subparagraph
(B)(iii)—
‘‘(i) a lease shall be treated as in effect
on January 1, 1999, without regard to its
renewal after such date, so long as such re-
newal is pursuant to the terms of such lease
as in effect on whichever of the dates under
subparagraph (B)(iii) is the latest, and
‘‘(ii) a lease of a property entered into
after whichever of the dates under subpara-
graph (B)(iii) is the latest shall be treated
as in effect on such date if—
‘‘(I) on such date, a lease of such
property from the trust was in effect,
and
‘‘(II) under the terms of the new
lease, such trust receives a substan-
tially similar or lesser benefit in com-
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parison to the lease referred to in sub-
clause (I).
‘‘(D) QUALIFIED LODGING FACILITY.—For
purposes of this paragraph—
‘‘(i) IN GENERAL.—The term ‘qualified
lodging facility’ means any lodging facility
unless wagering activities are conducted at
or in connection with such facility by any
person who is engaged in the business of ac-
cepting wagers and who is legally author-
ized to engage in such business at or in con-
nection with such facility.
‘‘(ii) LODGING
FACILITY.—The term
‘lodging facility’ means a hotel, motel, or
other establishment more than one-half of
the dwelling units in which are used on a
transient basis.
‘‘(iii) CUSTOMARY AMENITIES AND FA-
CILITIES.—The term ‘lodging facility’ in-
cludes customary amenities and facilities
operated as part of, or associated with, the
lodging facility so long as such amenities
and facilities are customary for other prop-
erties of a comparable size and class owned
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by other owners unrelated to such real estate
investment trust.
‘‘(E) OPERATE
INCLUDES
MANAGE.—Ref-
erences in this paragraph to operating a prop-
erty shall be treated as including a reference to
managing the property.
‘‘(F) RELATED PERSON.—Persons shall be
treated as related to each other if such persons
are treated as a single employer under subsection
(a) or (b) of section 52.’’.
(2) CONFORMING
AMENDMENT.—Subparagraph
(B) of section 856(d)(2) is amended by inserting ‘‘ex-
cept as provided in paragraph (8),’’ after ‘‘(B)’’.
(3) DETERMINING
RENTS
FROM
REAL
PROP-
ERTY.—
(A)(i) Paragraph (1) of section 856(d) is
amended by striking ‘‘adjusted bases’’ each place
it occurs and inserting ‘‘fair market values’’.
(ii) The amendment made by this subpara-
graph shall apply to taxable years beginning
after December 31, 2000.
(B)(i) Clause (i) of section 856(d)(2)(B) is
amended by striking ‘‘number’’ and inserting
‘‘value’’.
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(ii) The amendment made by this subpara-
graph shall apply to amounts received or accrued
in taxable years beginning after December 31,
2000, except for amounts paid pursuant to leases
in effect on July 12, 1999, or pursuant to a
binding contract in effect on such date and at all
times thereafter.
SEC. 613. TAXABLE REIT SUBSIDIARY.
(a) IN GENERAL.—Section 856 is amended by adding
at the end the following new subsection:
‘‘(l) TAXABLE REIT SUBSIDIARY.—For purposes of
this part—
‘‘(1) IN GENERAL.—The term ‘taxable REIT sub-
sidiary’ means, with respect to a real estate invest-
ment trust, a corporation (other than a real estate in-
vestment trust) if—
‘‘(A) such trust directly or indirectly owns
stock in such corporation, and
‘‘(B) such trust and such corporation joint-
ly elect that such corporation shall be treated as
a taxable REIT subsidiary of such trust for pur-
poses of this part.
Such an election, once made, shall be irrevocable un-
less both such trust and corporation consent to its rev-
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ocation. Such election, and any revocation thereof,
may be made without the consent of the Secretary.
‘‘(2) 35 PERCENT OWNERSHIP IN ANOTHER TAX-
ABLE
REIT
SUBSIDIARY.—The term ‘taxable REIT
subsidiary’ includes, with respect to any real estate
investment trust, any corporation (other than a real
estate investment trust) with respect to which a tax-
able REIT subsidiary of such trust owns directly or
indirectly—
‘‘(A) securities possessing more than 35 per-
cent of the total voting power of the outstanding
securities of such corporation, or
‘‘(B) securities having a value of more than
35 percent of the total value of the outstanding
securities of such corporation.
The preceding sentence shall not apply to a qualified
REIT subsidiary (as defined in subsection (i)(2)).
The rule of section 856(c)(7) shall apply for purposes
of subparagraph (B).
‘‘(3) EXCEPTIONS.—The term ‘taxable REIT
subsidiary’ shall not include—
‘‘(A) any corporation which directly or in-
directly operates or manages a lodging facility
or a health care facility, and
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‘‘(B) any corporation which directly or in-
directly provides to any other person (under a
franchise, license, or otherwise) rights to any
brand name under which any lodging facility or
health care facility is operated.
Subparagraph (B) shall not apply to rights provided
to an eligible independent contractor to operate or
manage a lodging facility if such rights are held by
such corporation as a franchisee, licensee, or in a
similar capacity and such lodging facility is either
owned by such corporation or is leased to such cor-
poration from the real estate investment trust.
‘‘(4) DEFINITIONS.—For purposes of paragraph
(3)—
‘‘(A) LODGING FACILITY.—The term ‘lodg-
ing facility’ has the meaning given to such term
by paragraph (9)(D)(ii).
‘‘(B) HEALTH CARE FACILITY.—The term
‘health care facility’ has the meaning given to
such term by subsection (e)(6)(D)(ii).’’.
(b) CONFORMING AMENDMENT.—Paragraph (2) of sec-
tion 856(i) is amended by adding at the end the following
new sentence: ‘‘Such term shall not include a taxable REIT
subsidiary.’’.
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SEC. 614. LIMITATION ON EARNINGS STRIPPING.
Paragraph (3) of section 163( j) (relating to limitation
on deduction for interest on certain indebtedness) is amend-
ed by striking ‘‘and’’ at the end of subparagraph (A), by
striking the period at the end of subparagraph (B) and in-
serting ‘‘, and’’, and by adding at the end the following
new subparagraph:
‘‘(C) any interest paid or accrued (directly
or indirectly) by a taxable REIT subsidiary (as
defined in section 856(l)) of a real estate invest-
ment trust to such trust.’’.
SEC. 615. 100 PERCENT TAX ON IMPROPERLY ALLOCATED
AMOUNTS.
(a) IN GENERAL.—Subsection (b) of section 857 (relat-
ing to method of taxation of real estate investment trusts
and holders of shares or certificates of beneficial interest)
is amended by redesignating paragraphs (7) and (8) as
paragraphs (8) and (9), respectively, and by inserting after
paragraph (6) the following new paragraph:
‘‘(7) INCOME FROM REDETERMINED RENTS, RE-
DETERMINED DEDUCTIONS, AND EXCESS INTEREST.—
‘‘(A) IMPOSITION OF TAX.—There is hereby
imposed for each taxable year of the real estate
investment trust a tax equal to 100 percent of re-
determined rents, redetermined deductions, and
excess interest.
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‘‘(B) REDETERMINED RENTS.—
‘‘(i) IN GENERAL.—The term ‘redeter-
mined rents’ means rents from real prop-
erty (as defined in subsection 856(d)) the
amount of which would (but for subpara-
graph (E)) be reduced on distribution, ap-
portionment, or allocation under section
482 to clearly reflect income as a result of
services furnished or rendered by a taxable
REIT subsidiary of the real estate invest-
ment trust to a tenant of such trust.
‘‘(ii) EXCEPTION FOR CERTAIN SERV-
ICES.—Clause (i) shall not apply to
amounts received directly or indirectly by a
real estate investment trust for services de-
scribed in paragraph (1)(B) or (7)(C)(i) of
section 856(d).
‘‘(iii) EXCEPTION
FOR
DE
MINIMIS
AMOUNTS.—Clause (i) shall not apply to
amounts described in section 856(d)(7)(A)
with respect to a property to the extent such
amounts do not exceed the one percent
threshold described in section 856(d)(7)(B)
with respect to such property.
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‘‘(iv) EXCEPTION
FOR
COMPARABLY
PRICED
SERVICES.—Clause (i) shall not
apply to any service rendered by a taxable
REIT subsidiary of a real estate investment
trust to a tenant of such trust if—
‘‘(I) such subsidiary renders a sig-
nificant amount of similar services to
persons other than such trust and ten-
ants of such trust who are unrelated
(within 
the 
meaning 
of 
section
856(d)(8)(F)) to such subsidiary, trust,
and tenants, but
‘‘(II) only to the extent the charge
for such service so rendered is substan-
tially comparable to the charge for the
similar services rendered to persons re-
ferred to in subclause (I).
‘‘(v) EXCEPTION FOR CERTAIN SEPA-
RATELY
CHARGED
SERVICES.—Clause (i)
shall not apply to any service rendered by
a taxable REIT subsidiary of a real estate
investment trust to a tenant of such trust
if—
‘‘(I) the rents paid to the trust by
tenants (leasing at least 25 percent of
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the net leasable space in the trust’s
property) who are not receiving such
service from such subsidiary are sub-
stantially comparable to the rents paid
by tenants leasing comparable space
who are receiving such service from
such subsidiary, and
‘‘(II) the charge for such service
from such subsidiary is separately
stated.
‘‘(vi) EXCEPTION FOR CERTAIN SERV-
ICES BASED ON SUBSIDIARY’S INCOME FROM
THE SERVICES.—Clause (i) shall not apply
to any service rendered by a taxable REIT
subsidiary of a real estate investment trust
to a tenant of such trust if the gross income
of such subsidiary from such service is not
less than 150 percent of such subsidiary’s
direct cost in furnishing or rendering the
service.
‘‘(vii) EXCEPTIONS GRANTED BY SEC-
RETARY.—The Secretary may waive the tax
otherwise imposed by subparagraph (A) if
the trust establishes to the satisfaction of the
Secretary that rents charged to tenants were
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established on an arms’ length basis even
though a taxable REIT subsidiary of the
trust provided services to such tenants.
‘‘(C) REDETERMINED
DEDUCTIONS.—The
term ‘redetermined deductions’ means deductions
(other than redetermined rents) of a taxable
REIT subsidiary of a real estate investment
trust if the amount of such deductions would
(but for subparagraph (E)) be decreased on dis-
tribution, apportionment, or allocation under
section 482 to clearly reflect income as between
such subsidiary and such trust.
‘‘(D) EXCESS INTEREST.—The term ‘excess
interest’ means any deductions for interest pay-
ments by a taxable REIT subsidiary of a real es-
tate investment trust to such trust to the extent
that the interest payments are in excess of a rate
that is commercially reasonable.
‘‘(E) COORDINATION WITH SECTION 482.—
The imposition of tax under subparagraph (A)
shall be in lieu of any distribution, apportion-
ment, or allocation under section 482.
‘‘(F) REGULATORY AUTHORITY.—The Sec-
retary shall prescribe such regulations as may be
necessary or appropriate to carry out the pur-
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poses of this paragraph. Until the Secretary pre-
scribes such regulations, real estate investment
trusts and their taxable REIT subsidiaries may
base their allocations on any reasonable meth-
od.’’.
(b) AMOUNT SUBJECT TO TAX NOT REQUIRED TO BE
DISTRIBUTED.—Subparagraph (E) of section 857(b)(2) (re-
lating to real estate investment trust taxable income) is
amended by striking ‘‘paragraph (5)’’ and inserting ‘‘para-
graphs (5) and (7)’’.
SEC. 616. EFFECTIVE DATE.
(a) IN GENERAL.—The amendments made by sections
611 through 615 shall apply to taxable years beginning
after December 31, 2000.
(b) TRANSITIONAL RULES RELATED
TO SECTION
611.—
(1) EXISTING ARRANGEMENTS.—
(A) IN GENERAL.—Except as otherwise pro-
vided in this paragraph, the amendment made
by section 611 shall not apply to a real estate
investment trust with respect to—
(i) securities of a corporation held di-
rectly or indirectly by such trust on July
12, 1999,
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(ii) securities of a corporation held by
an entity on July 12, 1999, if such trust ac-
quires control of such entity pursuant to a
written binding contract in effect on such
date and at all times thereafter before such
acquisition,
(iii) securities received by such trust
(or a successor) in exchange for, or with re-
spect to, securities described in clause (i) or
(ii) in a transaction in which gain or loss
is not recognized, and
(iv) securities acquired directly or in-
directly by such trust as part of a reorga-
nization (as defined in section 368(a)(1) of
the Internal Revenue Code of 1986) with re-
spect to such trust if such securities are de-
scribed in clause (i), (ii), or (iii) with re-
spect to any other real estate investment
trust.
(B) NEW TRADE OR BUSINESS OR SUBSTAN-
TIAL
NEW
ASSETS.—Subparagraph (A) shall
cease to apply to securities of a corporation as
of the first day after July 12, 1999, on which
such corporation engages in a substantial new
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line of business, or acquires any substantial
asset, other than—
(i) pursuant to a binding contract in
effect on such date and at all times there-
after before the acquisition of such asset,
(ii) in a transaction in which gain or
loss is not recognized by reason of section
1031 or 1033 of the Internal Revenue Code
of 1986, or
(iii) in a reorganization (as so de-
fined) with another corporation the securi-
ties of which are described in paragraph
(1)(A) of this subsection.
(C) LIMITATION ON TRANSITION RULES.—
Subparagraph (A) shall cease to apply to securi-
ties of a corporation held, acquired, or received,
directly or indirectly, by a real estate investment
trust as of the first day after July 12, 1999, on
which such trust acquires any additional securi-
ties of such corporation other than—
(i) pursuant to a binding contract in
effect on July 12, 1999, and at all times
thereafter, or
(ii) in a reorganization (as so defined)
with another corporation the securities of
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which are described in paragraph (1)(A) of
this subsection.
(2) TAX-FREE CONVERSION.—If—
(A) at the time of an election for a corpora-
tion to become a taxable REIT subsidiary, the
amendment made by section 611 does not apply
to such corporation by reason of paragraph (1),
and
(B) such election first takes effect before
January 1, 2004,
such election shall be treated as a reorganization
qualifying under section 368(a)(1)(A) of such Code.
SEC. 617. HEALTH CARE REITS.
(a) SPECIAL FORECLOSURE RULE FOR HEALTH CARE
PROPERTIES.—Subsection (e) of section 856 (relating to
special rules for foreclosure property) is amended by adding
at the end the following new paragraph:
‘‘(6) SPECIAL
RULE
FOR
QUALIFIED
HEALTH
CARE
PROPERTIES.—For 
purposes 
of 
this
subsection—
‘‘(A) ACQUISITION
AT
EXPIRATION
OF
LEASE.—The term ‘foreclosure property’ shall in-
clude any qualified health care property ac-
quired by a real estate investment trust as the
result of the termination of a lease of such prop-
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erty (other than a termination by reason of a de-
fault, or the imminence of a default, on the
lease).
‘‘(B) GRACE
PERIOD.—In the case of a
qualified health care property which is fore-
closure property solely by reason of subpara-
graph (A), in lieu of applying paragraphs (2)
and (3)—
‘‘(i) the qualified health care property
shall cease to be foreclosure property as of
the close of the second taxable year after the
taxable year in which such trust acquired
such property, and
‘‘(ii) if the real estate investment trust
establishes to the satisfaction of the Sec-
retary that an extension of the grace period
in clause (i) is necessary to the orderly leas-
ing or liquidation of the trust’s interest in
such qualified health care property, the Sec-
retary may grant one or more extensions of
the grace period for such qualified health
care property.
Any such extension shall not extend the grace pe-
riod beyond the close of the 6th year after the
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taxable year in which such trust acquired such
qualified health care property.
‘‘(C) INCOME
FROM
INDEPENDENT
CON-
TRACTORS.—For purposes of applying para-
graph (4)(C) with respect to qualified health care
property which is foreclosure property by reason
of subparagraph (A) or paragraph (1), income
derived or received by the trust from an inde-
pendent contractor shall be disregarded to the ex-
tent such income is attributable to—
‘‘(i) any lease of property in effect on
the date the real estate investment trust ac-
quired the qualified health care property
(without regard to its renewal after such
date so long as such renewal is pursuant to
the terms of such lease as in effect on such
date), or
‘‘(ii) any lease of property entered into
after such date if—
‘‘(I) on such date, a lease of such
property from the trust was in effect,
and
‘‘(II) under the terms of the new
lease, such trust receives a substan-
tially similar or lesser benefit in com-