‘‘(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 ac-
quired such property, and
‘‘(ii) if the real estate investment
trust establishes to the satisfaction of the
Secretary that an extension of the grace
period in clause (i) is necessary to the or-
derly leasing or liquidation of the trust’s
interest in such qualified health care prop-
erty, the Secretary may grant 1 or more
extensions of the grace period for such
qualified health care property.
Any such extension shall not extend the grace
period beyond the close of the 6th year after
the 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
independent contractor shall be disregarded to
the extent such income is attributable to—
‘‘(i) any lease of property in effect on
the date the real estate investment trust
acquired 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-
parison to the lease referred to in sub-
clause (I).
‘‘(D) QUALIFIED
HEALTH
CARE
PROP-
ERTY.—
‘‘(i) IN GENERAL.—The term ‘quali-
fied health care property’ means any real
property (including interests therein), and
any personal property incident to such real
property, which—
‘‘(I) is a health care facility, or
‘‘(II) is necessary or incidental to
the use of a health care facility.
‘‘(ii) HEALTH
CARE
FACILITY.—For
purposes of clause (i), the term ‘health
care facility’ means a hospital, nursing fa-
cility, assisted living facility, congregate
care facility, qualified continuing care facil-
ity (as defined in section 7872(g)(4)), or
other licensed facility which extends med-
ical or nursing or ancillary services to pa-
tients and which, immediately before the
termination, expiration, default, or breach
of the lease of or mortgage secured by
such facility, was operated by a provider of
such services which was eligible for partici-
pation in the medicare program under title
XVIII of the Social Security Act with re-
spect to such facility.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
the date of enactment of this Act.
TITLE 
III—CONFORMITY 
WITH
REGULATED 
INVESTMENT
COMPANY RULES
SEC. 301. CONFORMITY WITH REGULATED INVESTMENT
COMPANY RULES.
(a) DISTRIBUTION REQUIREMENT.—Clauses (i) and
(ii) of section 857(a)(1)(A) (relating to requirements ap-
plicable to real estate investment trusts) are each amended
by striking ‘‘95 percent (90 percent for taxable years be-
ginning before January 1, 1980)’’ and inserting ‘‘90 per-
cent’’.
(b) IMPOSITION
OF TAX.—Clause (i) of section
857(b)(5)(A) (relating to imposition of tax in case of fail-
ure to meet certain requirements) is amended by striking
‘‘95 percent (90 percent in the case of taxable years begin-
ning before January 1, 1980)’’ and inserting ‘‘90 per-
cent’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
the date of enactment of this Act.
TITLE 
IV—CLARIFICATION 
OF
DEFINITION 
OF 
INDE-
PENDENT CONTRACTOR
SEC. 
401. 
CLARIFICATION 
OF 
DEFINITION 
OF 
INDE-
PENDENT CONTRACTOR.
(a) IN GENERAL.—Paragraph (3) of section 856(d)
(relating to independent contractor defined) is amended
by adding at the end the following flush sentence:
‘‘In the event that any class of stock of either the
real estate investment trust or such person is regu-
larly traded on an established securities market, only
persons who own, directly or indirectly, more than 5
percent of such class of stock shall be taken into ac-
count as owning any of the stock of such class for
purposes of applying the 35 percent limitation set
forth in subparagraph (B) (but all of the out-
standing stock of such class shall be considered out-
standing in order to compute the denominator for
purpose of determining the applicable percentage of
ownership).’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
the date of the enactment of this Act.