I 
112TH CONGRESS 
1ST SESSION H. R. 2989 
To amend the Internal Revenue Code of 1986 to exempt certain stock of 
real estate investment trusts from the tax on foreign investments in 
United States real property interests, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 21, 2011 
Mr. BRADY of Texas (for himself, Mr. CROWLEY, Mr. TIBERI, and Ms. BERK-
LEY) 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 exempt 
certain stock of real estate investment trusts from the 
tax on foreign investments in United States real property 
interests, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Real Estate Jobs and 
Investment Act of 2011’’. 
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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 to read 
as follows: 
‘‘(3) EXCEPTIONS
FOR
CERTAIN
STOCK
DIS-
POSITIONS.— 
‘‘(A) STOCK REGULARLY TRADED ON ES-
TABLISHED
SECURITIES
MARKETS.—If any 
class of stock of a corporation is regularly trad-
ed on an established securities market, stock of 
such class shall be treated as a United States 
real property interest only in the case of a per-
son who, at some time during the shorter of the 
periods described in paragraph (1)(A)(ii), held 
more than 5 percent of such class of stock. 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’. 
‘‘(B) CERTAIN STOCK IN REAL ESTATE IN-
VESTMENT TRUSTS.— 
‘‘(i) IN GENERAL.—Stock of a real es-
tate investment trust held by a qualified 
shareholder shall not be treated as a 
United States real property interest except 
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to the extent that an investor in the quali-
fied shareholder holds (directly or indi-
rectly through the qualified shareholder) 
more than 10 percent of the stock of such 
real estate investment trust. 
‘‘(ii) 
QUALIFIED
SHAREHOLDER.— 
For purposes of this subparagraph, the 
term ‘qualified shareholder’ means a share-
holder— 
‘‘(I) which would be eligible for a 
reduced rate of withholding under any 
income tax treaty of the United States 
with respect to ordinary dividends 
paid by a real estate investment trust 
even if such shareholder holds more 
than 10 percent of the stock of such 
real estate investment trust, and 
‘‘(II) whose principal class of in-
terests is listed and regularly traded 
on one or more recognized stock ex-
changes (as defined in the relevant in-
come tax treaty referred to in sub-
clause (I)).’’. 
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interest if such individual or corporation 
did not own more than 5 percent of such 
class of stock (10 percent in the case of 
stock of a real estate investment trust) at 
any time during the 1-year period ending 
on the date of such distribution, and 
‘‘(ii) 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 in-
vestment trust held by such qualified 
shareholder is not treated as a United 
States real property interest under sub-
section (c)(3)(B). 
‘‘(B) SPECIAL RULE.—Subparagraph (A) 
shall not apply to distributions which are treat-
ed as a sale or exchange of stock or property 
pursuant to section 301(c)(3), 302, or 331.’’. 
(c) DEFINITION OF DOMESTICALLY CONTROLLED.— 
Subparagraph (B) of section 897(h)(4) of such Code is 
amended by adding at the end the following: ‘‘In deter-
mining whether a qualified investment entity is domesti-
cally controlled, any stock in the qualified investment enti-
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ty held by another qualified investment entity shall be 
treated as held by a foreign person unless such qualified 
investment entity is domestically controlled. In making 
such determination 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 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.’’. 
(d) CONFORMING AMENDMENT.—Subparagraph (C) 
of section 897(c)(6) of such Code is amended— 
(1) by striking ‘‘more than 5 percent’’ and in-
serting ‘‘more than 5 or 10 percent, whichever is ap-
plicable,’’, and 
(2) by striking ‘‘substituting ‘5 percent’ for ‘50 
percent’ ’’ and inserting ‘‘substituting ‘5 percent or 
10 percent, whichever is applicable’ for ‘50 per-
cent’ ’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to dispositions and distributions 
made after the date of the enactment of this Act. 
SEC. 3. UNITED STATES REAL PROPERTY INTEREST. 
(a) IN GENERAL.—Subparagraph (B) of section 
897(c)(1) of the Internal Revenue Code of 1986 is amend-
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ed by striking all that precedes clause (i) and inserting 
the following: 
‘‘(B) EXCLUSION FOR INTEREST IN CER-
TAIN CORPORATIONS.—The term ‘United States 
real property interest’ does not include any in-
terest 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 
subsection (a) shall apply to dispositions made after the 
date of the enactment of this Act. 
Æ 
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