I 
113TH CONGRESS 
1ST SESSION H. R. 2870 
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 
JULY 31, 2013 
Mr. BRADY of Texas (for himself, Mr. CROWLEY, Ms. JENKINS, Mr. BLU-
MENAUER, Mr. RANGEL, Mr. ROSKAM, Mr. PASCRELL, Mr. VAN HOL-
LEN, Mr. SAM JOHNSON of Texas, Mr. LARSON of Connecticut, Mr. SES-
SIONS, Mr. GERLACH, Mr. KIND, and Mr. KING of New York) 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 Invest-
ment and Jobs Act of 2013’’. 
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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— 
(1) by striking all that precedes ‘‘If any class’’ 
and inserting the following: 
‘‘(3) EXCEPTIONS FOR CERTAIN STOCK.— 
‘‘(A) EXCEPTION FOR STOCK REGULARLY 
TRADED
ON
ESTABLISHED
SECURITIES
MAR-
KETS.—’’, 
(2) by inserting before the period the following: 
‘‘. In the case of any class of stock of a real estate 
investment trust, the preceding sentence shall be ap-
plied by substituting ‘10 percent’ for ‘5 percent’ ’’, 
and 
(3) by adding at the end the following new sub-
paragraph: 
‘‘(B) EXCEPTION FOR CERTAIN STOCK IN 
REAL ESTATE INVESTMENT 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 
to the extent that an investor in the quali-
fied shareholder (other than an investor 
that is a qualified shareholder) holds (di-
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rectly or indirectly 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 an enti-
ty— 
‘‘(I) that is eligible for benefits of 
a comprehensive income tax treaty 
with the United States which includes 
an exchange of information program, 
‘‘(II) that is a qualified collective 
investment vehicle, 
‘‘(III) whose principal class of in-
terests is listed and regularly traded 
on one or more recognized stock ex-
changes (as defined in such com-
prehensive income tax treaty), and 
‘‘(IV) that maintains records on 
the identity of each person who, at 
any time during the qualified share-
holder’s taxable year, is the direct 
owner of more than 10 percent of the 
class of interest described in clause 
(III). 
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‘‘(iii) QUALIFIED
COLLECTIVE
IN-
VESTMENT
VEHICLE.—For purposes of 
this subparagraph, the term ‘qualified col-
lective investment vehicle’ means an entity 
that— 
‘‘(I) would be eligible for a re-
duced rate of withholding under such 
comprehensive income tax treaty with 
respect to ordinary dividends paid by 
a real estate investment trust, even if 
such entity holds more than 10 per-
cent of the stock of such real estate 
investment trust, 
‘‘(II) is a corporation (other than 
a corporation that is entitled to a de-
duction or exclusion for dividends paid 
to its shareholders or subject to a re-
quirement to distribute any portion of 
its taxable income annually) engaged 
primarily in the trade or business of 
operating or managing real estate en-
tities or assets either directly or 
through entities under common con-
trol (within the meaning of sub-
sections (a) and (b) of section 52), or 
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‘‘(III) is designated as a qualified 
collective investment vehicle by the 
Secretary and is either— 
‘‘(aa) 
fiscally 
transparent 
within the meaning of section 
894, or 
‘‘(bb) required to include 
dividends in its gross income, but 
is entitled to a deduction for dis-
tributions to its investors.’’. 
(b) DISTRIBUTIONS BY REAL ESTATE INVESTMENT 
TRUSTS.—Paragraph (1) of section 897(h) of the Internal 
Revenue Code of 1986 is amended— 
(1) by striking ‘‘Any distribution’’ and inserting 
the following: 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), any distribution’’, 
(2) by inserting ‘‘(10 percent in the case of 
stock of a real estate investment trust)’’ after ‘‘5 
percent of such class of stock’’, 
(3) by inserting ‘‘, and 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 
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real estate investment trust held by such qualified 
shareholder is not treated as a United States real 
property interest under subsection (c)(3)(B)’’ before 
the period at the end of the second sentence, and 
(4) by adding at the end the following new sub-
paragraph: 
‘‘(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.—Paragraph (4) of section 897(h) of 
the Internal Revenue Code of 1986 is amended by adding 
at the end of subparagraph (B) the following: ‘‘In deter-
mining whether a qualified investment entity is domesti-
cally controlled, any stock in the qualified investment enti-
ty held by another qualified investment entity shall be 
treated as held by a foreign person unless such other 
qualified investment entity is domestically controlled. In 
making such a determination, a qualified investment enti-
ty shall be permitted to presume that stock held by a hold-
er of less than 5 percent of a class of stock regularly trad-
ed 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 in-
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vestment entity has actual knowledge regarding stock 
ownership.’’. 
(d) CONFORMING AMENDMENT.—Subparagraph (C) 
of section 897(c)(6) of the Internal Revenue Code of 1986 
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 DATES.— 
(1) IN GENERAL.—The amendments made by 
subsection (a) shall apply to dispositions on and 
after the date of the enactment of this Act. 
(2) DISTRIBUTIONS.—The amendments made 
by subsection (b) shall apply to any distribution by 
a real estate investment trust on or after the date 
of the enactment of this Act which is treated as a 
deduction for a taxable year of such trust ending 
after such date. 
(3) DEFINITIONS.—The amendments made by 
subsections (c) and (d) shall take effect on the date 
of the enactment of this Act. 
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SEC. 3. UNITED STATES REAL PROPERTY INTEREST. 
(a) UNITED STATES REAL PROPERTY INTEREST.— 
Subparagraph (B) of section 897(c)(1) of the Internal 
Revenue Code of 1986 is amended by striking all that pre-
cedes ‘‘(i) as of the date of the disposition’’ 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 
this section shall take effect on the date of the enactment 
of this Act. 
Æ 
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