I 
118TH CONGRESS 
1ST SESSION H. R. 3749 
To amend the Internal Revenue Code of 1986 to modify the treatment 
of certain rents received by real estate investment trusts from related parties. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 30, 2023 
Mr. LAHOOD (for himself and Mr. SCHNEIDER) 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 modify 
the treatment of certain rents received by real estate 
investment trusts from related parties. 
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 ‘‘Retail Revitalization 
Act of 2023’’. 
SEC. 2. MODIFICATION OF TREATMENT OF CERTAIN RENTS 
RECEIVED BY REAL ESTATE INVESTMENT 
TRUST FROM RELATED PARTIES. 
(a) SPECIAL RULE FOR DISTRESSED TENANTS.— 
VerDate Sep 11 2014 
23:46 Jun 20, 2023
Jkt 039200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H3749.IH
H3749
kjohnson on DSK79L0C42PROD with BILLS
(1) IN GENERAL.—Section 856(d) of the Inter-
nal Revenue Code of 1986 is amended by adding at 
the end the following new paragraph: 
‘‘(10) SPECIAL
RULE
FOR
DISTRESSED
TEN-
ANTS.— 
‘‘(A) IN GENERAL.—Except as otherwise 
provided by the Secretary, in the case of a real 
estate investment trust which makes a qualified 
acquisition of a qualified tenant during the 4- 
year period beginning on the date of the enact-
ment of this paragraph, paragraph (2)(B) shall 
be applied with respect to such tenant by sub-
stituting ‘50 percent’ for ‘10 percent’ each 
place it appears therein. 
‘‘(B) QUALIFIED ACQUISITION.—For pur-
poses of this paragraph— 
‘‘(i) IN GENERAL.—The term ‘quali-
fied acquisition’ means the acquisition by a 
real estate investment trust of stock, as-
sets, or net profits in connection with the 
bankruptcy, insolvency (within the mean-
ing of section 108(d)(3)), or cash flow in-
solvency of a qualified tenant. 
‘‘(ii) CASH FLOW INSOLVENCY.—For 
purposes of clause (i), a qualified tenant 
VerDate Sep 11 2014 
23:46 Jun 20, 2023
Jkt 039200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H3749.IH
H3749
kjohnson on DSK79L0C42PROD with BILLS
shall be treated as having cash flow insol-
vency following a reasonable determination 
by the real estate investment trust, based 
upon an examination of the facts and cir-
cumstances, that such tenant’s revenue is 
insufficient to cover its debt service pay-
ments based on such tenant’s applicable fi-
nancial statement (as defined in section 
451(b)(3)). 
‘‘(C) QUALIFIED TENANT.—For purposes 
of this paragraph— 
‘‘(i) IN GENERAL.—The term ‘quali-
fied tenant’ means, with respect to any ac-
quisition referred to in subparagraph (B), 
any person from which the real estate in-
vestment trust received or accrued rents 
from real property pursuant to a lease 
which was in effect on the date of the en-
actment of this paragraph. 
‘‘(ii) RENEWALS, ETC., OF EXISTING 
LEASES.—For purposes of clause (i), a 
lease shall be treated as in effect on the 
date of the enactment of this paragraph if 
the conditions of paragraph (9)(C) are sat-
isfied. 
VerDate Sep 11 2014 
23:46 Jun 20, 2023
Jkt 039200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H3749.IH
H3749
kjohnson on DSK79L0C42PROD with BILLS
‘‘(iii) SUCCESSORS.—The term ‘quali-
fied tenant’ shall include a person if such 
person is a successor to a qualified tenant 
within the meaning of subsection (g) (with-
out regard to such person’s status as a 
real estate investment trust or any con-
tinuity of shareholder interest requirement) 
or for purposes of section 381. 
‘‘(D) LIMITATION ON PERIOD FOR WHICH 
TREATMENT
APPLIES.—With respect to any 
qualified acquisition, subparagraph (A) shall 
apply only to amounts received or accrued dur-
ing the 7-taxable-year period beginning with the 
taxable year which includes the date of such ac-
quisition. 
‘‘(E) 
COORDINATION
WITH
CERTAIN 
OTHER PROVISIONS.—For purposes of clauses 
(i) and (v) of paragraph (8)(A), whether a per-
son is described in paragraph (2)(B) shall be 
determined after application of subparagraph 
(A) of this paragraph.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
856(d)(2)(B) of such Code is amended by striking 
‘‘paragraph (8)’’ and inserting ‘‘paragraphs (8) and 
(10)’’. 
VerDate Sep 11 2014 
23:46 Jun 20, 2023
Jkt 039200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H3749.IH
H3749
kjohnson on DSK79L0C42PROD with BILLS
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to qualified acquisi-
tions (as defined in section 856(d)(10)(B) of the In-
ternal Revenue Code of 1986, as added by this sub-
section) after the date of the enactment of this Act, 
in taxable years ending after such date. 
(b) INCREASE IN PERCENTAGE OF OWNERSHIP AT 
WHICH RENTS ARE GENERALLY DISQUALIFIED.— 
(1) IN
GENERAL.—Section 856(d)(2)(B) of 
such Code is amended by striking ‘‘10 percent’’ each 
place it appears and inserting ‘‘30 percent’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to taxable years end-
ing after the date of the enactment of this Act. 
(c) INCREASE IN PERCENTAGE OF OWNERSHIP AT 
WHICH CONSTRUCTIVE OWNERSHIP RULES BEGIN TO 
APPLY.— 
(1) IN GENERAL.—Section 856(d)(5) of such 
Code is amended— 
(A) by striking ‘‘10 percent’’ in subpara-
graph (A) and inserting ‘‘30 percent’’, and 
(B) by striking ‘‘25 percent’’ in subpara-
graph (B) and inserting ‘‘30 percent’’. 
VerDate Sep 11 2014 
23:46 Jun 20, 2023
Jkt 039200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H3749.IH
H3749
kjohnson on DSK79L0C42PROD with BILLS
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to taxable years end-
ing after the date of the enactment of this Act. 
(d) LIMITATION ON APPLICATION OF CONSTRUCTIVE 
OWNERSHIP RULES.— 
(1) IN GENERAL.—Section 856(d)(5) of such 
Code is amended by striking ‘‘and’’ at the end of 
subparagraph (A), by striking the period at the end 
of subparagraph (B) and inserting ‘‘, and’’, and by 
adding at the end the following: 
‘‘(C) except as otherwise provided by the 
Secretary, stock, assets, and net profits con-
structively owned by a partnership, estate, 
trust, or corporation by reason of the applica-
tion of section 318(a)(3) (after application of 
subparagraphs (A) and (B)) shall not be con-
sidered as owned by it for purposes of again ap-
plying such section in order to make another 
person the constructive owner of such stock, as-
sets, or net profits. 
Subparagraph (C) shall not prevent any person from 
being the constructive owner of stock, assets, or net 
profits of any person as the result of any other ap-
plication of section 318(a) (as modified by this para-
graph).’’. 
VerDate Sep 11 2014 
23:46 Jun 20, 2023
Jkt 039200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H3749.IH
H3749
kjohnson on DSK79L0C42PROD with BILLS
(2) NO INFERENCE.—Nothing in the amend-
ments made by paragraph (1) shall be construed to 
create any inference with respect to the proper appli-
cation of section 318 of the Internal Revenue Code 
of 1986 to cases other than cases to which such 
amendments apply. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to taxable years end-
ing after the date of the enactment of this Act. 
(e) MODIFICATION
OF RENTAL EXCEPTION
FOR 
TAXABLE REIT SUBSIDIARIES.— 
(1) IN
GENERAL.—Section 856(d)(8)(A)(i) of 
such Code is amended to read as follows: 
‘‘(i) IN GENERAL.—The requirements 
of this subparagraph are met with respect 
to any property if— 
‘‘(I) not more than 30 percent of 
the leasable space of such property is 
rented to taxable REIT subsidiaries 
and other persons described in para-
graph (2)(B) (determined without re-
gard to paragraph (10)), and 
‘‘(II) not more than 50 percent 
of the leasable space of such property 
is rented to taxable REIT subsidiaries 
VerDate Sep 11 2014 
23:46 Jun 20, 2023
Jkt 039200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H3749.IH
H3749
kjohnson on DSK79L0C42PROD with BILLS
and other persons described in para-
graph (2)(B) (determined after the 
application of paragraph (10)).’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to taxable years end-
ing after the date of the enactment of this Act. 
Æ 
VerDate Sep 11 2014 
23:46 Jun 20, 2023
Jkt 039200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6301
E:\BILLS\H3749.IH
H3749
kjohnson on DSK79L0C42PROD with BILLS