544 
‘‘(7) SPECIAL RULES FOR PARAGRAPHS (2), (3), 
AND (9).—Paragraph (2), (3), or (9) (as the case may 
be) shall not apply to any disposition— 
‘‘(A) if— 
‘‘(i) the transferee or qualified sub-
stitute has actual knowledge that the affi-
davit referred to in such paragraph, or the 
statement 
referred 
to 
in 
paragraph 
(9)(A)(ii), is false, or 
‘‘(ii) the transferee or qualified sub-
stitute receives a notice (as described in sub-
section (d)) from a transferor’s agent, trans-
feree’s agent, or qualified substitute that 
such affidavit or statement is false, or 
‘‘(B) if the Secretary by regulations requires 
the transferee or qualified substitute to furnish a 
copy of such affidavit or statement to the Sec-
retary and the transferee or qualified substitute 
fails to furnish a copy of such affidavit or state-
ment to the Secretary at such time and in such 
manner as required by such regulations.’’. 
(2) LIABILITY.— 
(A) NOTICE.—Paragraph (1) of section 
1445(d) (relating to notice of false affidavit; for-
eign corporations) is amended to read as follows:
545 
‘‘(1) NOTICE
OF
FALSE
AFFIDAVIT; FOREIGN 
CORPORATIONS.—If— 
‘‘(A) the transferor furnishes the transferee 
or qualified substitute an affidavit described in 
paragraph (2) of subsection (b) or a domestic 
corporation furnishes the transferee an affidavit 
described in paragraph (3) of subsection (b), and 
‘‘(B) in the case of— 
‘‘(i) any transferor’s agent— 
‘‘(I) such agent has actual knowl-
edge that such affidavit is false, or 
‘‘(II) in the case of an affidavit 
described in subsection (b)(2) furnished 
by a corporation, such corporation is a 
foreign corporation, or 
‘‘(ii) any transferee’s agent or qualified 
substitute, such agent or substitute has ac-
tual knowledge that such affidavit is false, 
such agent or qualified substitute shall so notify 
the transferee at such time and in such manner 
as the Secretary shall require by regulations.’’. 
(B) FAILURE TO FURNISH NOTICE.—Para-
graph (2) of section 1445(d) (relating to failure 
to furnish notice) is amended to read as follows: 
‘‘(2) FAILURE TO FURNISH NOTICE.—
546 
‘‘(A) IN
GENERAL.—If any transferor’s 
agent, transferee’s agent, or qualified substitute 
is required by paragraph (1) to furnish notice, 
but fails to furnish such notice at such time or 
times and in such manner as may be required 
by regulations, such agent or substitute shall 
have the same duty to deduct and withhold that 
the transferee would have had if such agent or 
substitute had complied with paragraph (1). 
‘‘(B) LIABILITY
LIMITED
TO
AMOUNT
OF 
COMPENSATION.—An agent’s or substitute’s li-
ability under subparagraph (A) shall be limited 
to the amount of compensation the agent or sub-
stitute derives from the transaction.’’. 
(C) CONFORMING AMENDMENT.—The head-
ing for section 1445(d) is amended by striking 
‘‘OR TRANSFEREE’S AGENTS’’ and inserting ‘‘, 
TRANSFEREE’S AGENTS, OR QUALIFIED SUB-
STITUTES’’. 
(d) EFFECTIVE DATE.—The amendments made by this 
section shall apply to dispositions of United States real 
property interests after the date of the enactment of this 
Act.
547 
SEC. 619. MODIFICATION OF DEFINITION OF TAX-EXEMPT 
USE PROPERTY FOR PURPOSES OF THE RE-
HABILITATION CREDIT. 
(a) 
IN
GENERAL.—Subclause 
(I) 
of 
section 
47(c)(2)(B)(v) is amended by striking ‘‘section 168(h)’’ and 
inserting ‘‘section 168(h), except that ‘50 percent’ shall be 
substituted for ‘35 percent’ in paragraph (1)(B)(iii) there-
of’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to expenditures properly taken into ac-
count for periods after December 31, 2007. 
Subtitle B—Reforms Related to 
Real Estate Investment Trusts 
PART 1—FOREIGN CURRENCY AND OTHER 
QUALIFIED ACTIVITIES 
SEC. 621. REVISIONS TO REIT INCOME TESTS. 
(a) 
ADDITION
OF
PERMISSIBLE
INCOME
CAT-
EGORIES.—Section 856(c) (relating to limitations) is 
amended— 
(1) by striking ‘‘and’’ at the end of paragraph 
(2)(G) and by inserting after paragraph (2)(H) the 
following new subparagraphs: 
‘‘(I) passive foreign exchange gains; and 
‘‘(J) any other item of income or gain as 
determined by the Secretary;’’, and
548 
(2) by striking ‘‘and’’ at the end of paragraphs 
(3)(H) and (3)(I) and by inserting after paragraph 
(3)(I) the following new subparagraphs: 
‘‘(J) real estate foreign exchange gains; and 
‘‘(K) any other item of income or gain as 
determined by the Secretary; and’’. 
(b) RULES REGARDING FOREIGN CURRENCY TRANS-
ACTIONS.—Section 856 (defining real estate investment 
trust) is amended by adding at the end the following new 
subsection: 
‘‘(n) RULES REGARDING FOREIGN CURRENCY TRANS-
ACTIONS.—With respect to any taxable year— 
‘‘(1) 
REAL
ESTATE
FOREIGN
EXCHANGE 
GAINS.—For purposes of subsection (c)(3)(J), the term 
‘real estate foreign exchange gains’ means— 
‘‘(A) foreign currency gains (as defined in 
section 988(b)(1)) which are attributable to— 
‘‘(i) any item described in subsection 
(c)(3) (other than in subparagraph (J) 
thereof), 
‘‘(ii) the acquisition or ownership of 
obligations secured by mortgages on real 
property or on interests in real property 
(other than foreign currency gains attrib-