Source: https://www.law.cornell.edu/uscode/text/26/897
Timestamp: 2019-03-20 15:28:50
Document Index: 586485247

Matched Legal Cases: ['§ 897', '§\u202f897', '§\u202f1702', '§\u202f1122', '§\u202f831', '§\u202f201', '§\u202f201', '§\u202f201', '§\u202f306', '§\u202f631', '§\u202f701', '§\u202f1810', '§\u202f1006', '§\u202f11801', '§\u202f13203', '§\u202f1702', '§\u202f411', '§\u202f403', '§\u202f504', '§\u202f208', '§\u202f749', '§\u202f321', '§\u202f133', '§\u202f133', '§\u202f322', '§\u202f12001', '§\u202f101', '§\u202f401', '§\u202f13001', '§\u202f401', '§\u202f101', '§\u202f322', '§\u202f401', '§\u202f101', '§\u202f101', '§\u202f101', '§\u202f101', '§\u202f101', '§\u202f101', '§\u202f101', '§\u202f101', '§\u202f101', '§\u202f101', '§\u202f101', '§\u202f101', '§\u202f101', '§\u202f101', '§\u202f101', '§\u202f322', '§\u202f325', '§\u202f322', '§\u202f133', '§\u202f322', '§\u202f101', '§\u202f322', '§\u202f322', '§\u202f323', '§\u202f505', '§\u202f504', '§\u202f505', '§\u202f506', '§\u202f411', '§\u202f418', '§\u202f411', '§\u202f411', '§\u202f411', '§\u202f411', '§\u202f411', '§\u202f411', '§\u202f701', '§\u202f631', '§\u202f1810', '§\u202f831', '§\u202f831', '§\u202f831', '§\u202f831', '§\u202f831', '§\u202f133', '§\u202f322', '§\u202f101', '§\u202f101', '§\u202f323', '§\u202f325', '§\u202f133', '§\u202f321', '§\u202f749', '§\u202f208', '§\u202f211', '§\u202f504', '§\u202f506', '§\u202f831', '§\u202f1125', '§\u202f1121', '§\u202f101', '§\u202f1228', '§\u202f1012', '§\u202f1012', '§\u202f1125', '§\u202f831', '§\u202f2', '§\u202f1125', '§\u202f2']

26 U.S. Code § 897 - Disposition of investment in United States real property | U.S. Code | US Law | LII / Legal Information Institute
Section 897. Disposition of investment in United States real property
26 U.S. Code § 897. Disposition of investment in United States real property
(1) Treatment as effectively connected with United States trade or businessFor purposes of this title, gain or loss of a nonresident alien individual or a foreigncorporation from the disposition of a United States real property interest shall be taken into account—
in the case of a foreigncorporation, under section 882(a)(1),
(A) In generalIn the case of any nonresident alien individual, the taxable excess for purposes of section 55(b)(1) shall not be less than the lesser of—
the individual’s alternative minimum taxable income (as defined in section 55(b)(2)) for the taxable year, or
the individual’s net United Statesreal property gain for the taxable year.
(B) Net United States real property gainFor purposes of subparagraph (A), the term “net United States real property gain” means the excess of—
(c) United States real property interestFor purposes of this section—
(A) In generalExcept as provided in subparagraph (B) or subsection (k), the term “United States real property interest” means—
(ii) any interest (other than an interest solely as a creditor) in any domesticcorporation unless the taxpayer establishes (at such time and in such manner as the Secretary by regulations prescribes) that such corporation was at no time a United States real property holding corporation during the shorter of—
(B) Exclusion for interest in certain corporationsThe term “United States real property interest” does not include any interest in a corporation if—
as of the date of the disposition of such interest, such corporation did not hold any United States real property interests,
ceased to be United States real property interests by reason of the application of this subparagraph to 1 or more other corporations, and
neither such corporation nor any predecessor of such corporation was a regulated investment company or a real estate investment trust at any time during the shorter of the periods described in subparagraph (A)(ii).
(2) United States real property holding corporationThe term “United States real property holding corporation” means any corporation if—
(4) Interests held by foreign corporations and by partnerships, trusts, and estatesFor purposes of determining whether any corporation is a United States real property holding corporation—
(A) In generalUnder regulations, for purposes of determining whether any corporation is a United States real property holding corporation, if any corporation (hereinafter in this paragraph referred to as the “first corporation”) holds a controlling interest in a second corporation—
(2) ExceptionsGain shall not be recognized under paragraph (1)—
(2) RegulationsThe Secretary shall prescribe regulations (which are necessary or appropriate to prevent the avoidance of Federal income taxes) providing—
[(f) Repealed. Pub. L. 104–188, title I, § 1702(g)(2), Aug. 20, 1996, 110 Stat. 1873]
(h) Special rules for certain investment entitiesFor purposes of this section—
(A) Qualified investment entityThe term “qualified investment entity” means—
(D) Testing periodThe term “testing period” means whichever of the following periods is the shortest:
(E) Special ownership rulesFor purposes of determining the holder of stock under subparagraphs (B) and (C)—
(B) Applicable wash sales transactionFor purposes of this paragraph—
(i) In generalThe term “applicable wash sales transaction” means any transaction (or series of transactions) under which a nonresident alien individual, foreign corporation, or qualified investment entity—
For purposes of subclause (II), a nonresident alien individual, foreigncorporation, or qualified investment entity shall be treated as having acquired any interest acquired by a person related (within the meaning of section 267(b) or 707(b)(1)) to the individual, corporation, or entity, and any interest which such person has entered into any contract or option to acquire.
(ii) Application to substitute dividend and similar paymentsSubparagraph (A) shall apply to—
a foreigncorporation holds a United States real property interest, and
then such foreigncorporation may make an election to be treated as a domestic corporation for purposes of this section, section 1445, and section 6039C.
(3) Making of electionAn election under paragraph (1) may be made only—
(j) Certain contributions to capitalExcept to the extent otherwise provided in regulations, gain shall be recognized by a nonresident alien individual or foreigncorporation on the transfer of a United States real property interest to a foreign corporation if the transfer is made as paid in surplus or as a contribution to capital, in the amount of the excess of—
In the case of any disposition of stock in a real estate investment trust, paragraphs (3) and (6)(C) of subsection (c) shall each be applied by substituting “more than 10 percent” for “more than 5 percent”.
In the case of any distribution from a real estate investment trust, subsection (h)(1) shall be applied by substituting “10 percent” for “5 percent”.
(A) In generalExcept as provided in subparagraph (B)—
stock of a real estate investment trust which is held directly (or indirectly through 1 or more partnerships) by a qualified shareholder shall not be treated as a United States real property interest, and
(B) ExceptionIn the case of a qualified shareholder with one or more applicable investors—
subparagraph (A)(i) shall not apply to the applicable percentage of the stock of the real estate investment trust held by the qualified shareholder, and
the applicable percentage of the amounts realized by the qualified shareholder with respect to any disposition of stock in the real estate investment trust or with respect to any distribution from the real estate investment trust attributable to gain from sales or exchanges of a United States real property interest shall be treated as amounts realized from the disposition of United States real property interests.
(C) Special rule for certain distributions treated as sale or exchangeIf a distribution by a real estate investment trust is treated as a sale or exchange of stock under section 301(c)(3), 302, or 331 with respect to a qualified shareholder—
in the case of an applicable investor, subparagraph (B) shall apply with respect to such distribution, and
in the case of any other person, such distribution shall be treated under section 857(b)(3)(F) [2] as a dividend from a real estate investment trust notwithstanding any other provision of this title.
(D) Applicable investorFor purposes of this subsection, the term “applicable investor” means, with respect to any qualified shareholder holding stock in a real estate investment trust, a person (other than a qualified shareholder) which—
holds more than 10 percent of the stock of such real estate investment trust (whether or not by reason of the person’s ownership interest in the qualified shareholder).
For purposes of subparagraph (B), the term “applicable percentage” means the percentage of the value of the interests (other than interests held solely as a creditor) in the qualified shareholder held by applicable investors.
(3) Qualified shareholderFor purposes of this subsection—
(A) In generalThe term “qualified shareholder” means a foreign person which—
is eligible for benefits of a comprehensive income tax treaty with the United States which includes an exchange of information program and the principal class of interests of which is listed and regularly traded on 1 or more recognized stock exchanges (as defined in such comprehensive income tax treaty), or
is a foreignpartnership that is created or organized under foreign law as a limited partnership in a jurisdiction that has an agreement for the exchange of information with respect to taxes with the United States and has a class of limited partnership units which is regularly traded on the New York Stock Exchange or Nasdaq Stock Market and such class of limited partnership units value is greater than 50 percent of the value of all the partnership units,
is a qualified collective investment vehicle, and
maintains records on the identity of each person who, at any time during the foreign person’s taxable year, holds directly 5 percent or more of the class of interest described in subclause (I) or (II) of clause (i), as the case may be.
(B) Qualified collective investment vehicleFor purposes of this subsection, the term “qualified collective investment vehicle” means a foreign person—
is eligible for benefits under the comprehensive income tax treaty described in subparagraph (A)(i)(I), but only if the dividends article of such treaty imposes conditions on the benefits allowable in the case of dividends paid by a real estate investment trust, and
is eligible under such treaty for a reduced rate of withholding with respect to ordinary dividends paid by a real estate investment trust even if such person holds more than 10 percent of the stock of such real estate investment trust,
is a publicly traded partnership (as defined in section 7704(b)) to which subsection (a) of section 7704 does not apply,
is a withholding foreignpartnership for purposes of chapters 3, 4, and 61, and
if such foreignpartnership were a domestic corporation, would be a United States real property holding corporation (determined without regard to paragraph (1)) at any time during the 5-year period ending on the date of disposition of, or distribution with respect to, such partnership’s interests in a real estate investment trust, or
(A) In generalFor the purposes of this subsection, in the case of an applicable investor who is a nonresident alien individual or a foreign corporation and is a partner in a partnership that is a qualified shareholder, if such partner’s proportionate share of USRPI gain for the taxable year exceeds such partner’s distributive share of USRPI gain for the taxable year, then
such partner’s distributive share of the amount of gain taken into account under subsection (a)(1) by the partner for the taxable year (determined without regard to this paragraph) shall be increased by the amount of such excess, and
such partner’s distributive share of items of income or gain for the taxable year that are not treated as gain taken into account under subsection (a)(1) (determined without regard to this paragraph) shall be decreased (but not below zero) by the amount of such excess.
(B) USRPI gainFor the purposes of this paragraph, the term “USRPI gain” means the excess (if any) of—
any gain recognized from the disposition of a United States real property interest, and
any distribution by a real estate investment trust that is treated as gain recognized from the sale or exchange of a United States real property interest, over
any loss recognized from the disposition of a United States real property interest.
For purposes of this paragraph, an applicable investor’s proportionate share of USRPI gain shall be determined on the basis of such investor’s share of partnership items of income or gain (excluding gain allocated under section 704(c)), whichever results in the largest proportionate share. If the investor’s share of partnership items of income or gain (excluding gain allocated under section 704(c)) may vary during the period such investor is a partner in the partnership, such share shall be the highest share such investor may receive.
(2) Qualified foreign pension fundFor purposes of this subsection, the term “qualified foreign pension fund” means any trust, corporation, or other organization or arrangement—
(B) which is established—
by such country (or one or more political subdivisions thereof) to provide retirement or pension benefits to participants or beneficiaries that are current or former employees (including self-employed individuals) or persons designated by such employees, as a result of services rendered by such employees to their employers, or
by one or more employers to provide retirement or pension benefits to participants or beneficiaries that are current or former employees (including self-employed individuals) or persons designated by such employees in consideration for services rendered by such employees to such employers,
which is subject to government regulation and with respect to which annual information about its beneficiaries is provided, or is otherwise available, to the relevant tax authorities in the country in which it is established or operates, and
contributions to such trust, corporation, organization, or arrangement which would otherwise be subject to tax under such laws are deductible or excluded from the gross income of such entity or arrangement or taxed at a reduced rate, or
taxation of any investment income of such trust, corporation, organization or arrangement is deferred, or such income is excluded from the gross income of such entity or arrangement or is taxed at a reduced rate.
(Added Pub. L. 96–499, title XI, § 1122(a), Dec. 5, 1980, 94 Stat. 2682; amended Pub. L. 97–34, title VIII, § 831(a)(1), (b)–(d), (f), (g), Aug. 13, 1981, 95 Stat. 352–354; Pub. L. 97–248, title II, § 201(d)(6), formerly § 201(c)(6), Sept. 3, 1982, 96 Stat. 419, renumbered § 201(d)(6), Pub. L. 97–448, title III, § 306(a)(1)(A)(i), Jan. 12, 1983, 96 Stat. 2400; Pub. L. 99–514, title VI, § 631(e)(12), title VII, § 701(e)(4)(G), title XVIII, § 1810(f)(1), Oct. 22, 1986, 100 Stat. 2275, 2343, 2826; Pub. L. 100–647, title I, § 1006(e)(19), Nov. 10, 1988, 102 Stat. 3403; Pub. L. 101–508, title XI, § 11801(a)(30), Nov. 5, 1990, 104 Stat. 1388–521; Pub. L. 103–66, title XIII, § 13203(c)(2), Aug. 10, 1993, 107 Stat. 462; Pub. L. 104–188, title I, § 1702(g)(2), Aug. 20, 1996, 110 Stat. 1873; Pub. L. 108–357, title IV, §§ 411(c), 418(a), Oct. 22, 2004, 118 Stat. 1504, 1512; Pub. L. 109–135, title IV, § 403(p)(1), Dec. 21, 2005, 119 Stat. 2626; Pub. L. 109–222, title V, §§ 504(a), 505(a), 506(a), May 17, 2006, 120 Stat. 355, 357; Pub. L. 110–343, div. C, title II, § 208(a), Oct. 3, 2008, 122 Stat. 3865; Pub. L. 111–312, title VII, § 749(a), Dec. 17, 2010, 124 Stat. 3320; Pub. L. 112–240, title III, § 321(a), Jan. 2, 2013, 126 Stat. 2332; Pub. L. 113–295, div. A, title I, § 133(a), Dec. 19, 2014, 128 Stat. 4018; Pub. L. 114–113, div. Q, title I, § 133(a), title III, §§ 322(a)(1), (2)(A), (b), 323(a), 325(a), Dec. 18, 2015, 129 Stat. 3055, 3098, 3101–3103; Pub. L. 115–97, title I, § 12001(b)(3)(D), Dec. 22, 2017, 131 Stat. 2093; Pub. L. 115–141, div. U, title I, § 101(p)(1)–(6), (q), title IV, § 401(a)(155), (156), Mar. 23, 2018, 132 Stat. 1166, 1167, 1191.)
Section 857(b)(3)(F), referred to in subsec. (k)(2)(C)(ii), was redesignated section 857(b)(3)(E) and a new subsec. (b)(3)(F) added by Pub. L. 115–97, title I, § 13001(b)(2)(K)(i), (iv), Dec. 22, 2017, 131 Stat. 2096, 2097.
2018—Subsec. (a)(1)(A). Pub. L. 115–141, § 401(a)(155), substituted “section 871(b)(1)” for “section 871(B)(1)”.
Subsec. (h)(4)(A)(ii). Pub. L. 115–141, § 101(p)(6), repealed Pub. L. 114–113, § 322(b)(2), and provided that such amendment shall be applied as if it had never been enacted. See 2015 Amendment note below.
Subsec. (k)(2). Pub. L. 115–141, § 401(a)(156), substituted “United States real property interest” for “USRPI” in heading.
Subsec. (k)(2)(B). Pub. L. 115–141, § 101(p)(1)(A), substituted “one” for “1” in introductory provisions.
Subsec. (k)(2)(B)(i). Pub. L. 115–141, § 101(p)(1)(A), added cl. (i) and struck out former cl. (i). Prior to amendment, cl. (i) read as follows: “subparagraph (A)(i) shall not apply to so much of the stock of a real estate investment trust held by a qualified shareholder as bears the same ratio to the value of the interests (other than interests held solely as a creditor) held by such applicable investors in the qualified shareholder bears to value of all interests (other than interests held solely as a creditor) in the qualified shareholder, and”.
Subsec. (k)(2)(B)(ii). Pub. L. 115–141, § 101(p)(1)(A), substituted “the applicable percentage of the” for “a percentage equal to the ratio determined under clause (i) of the”.
Subsec. (k)(2)(D). Pub. L. 115–141, § 101(p)(2), substituted “subsection” for “paragraph”.
Subsec. (k)(2)(E). Pub. L. 115–141, § 101(p)(3), substituted “and (D)” for “and (C) and paragraph (4)”.
Subsec. (k)(2)(F). Pub. L. 115–141, § 101(p)(1)(B), added subpar. (F).
Subsec. (k)(3)(B)(i). Pub. L. 115–141, § 101(p)(4), substituted “which—” for “which, under the comprehensive income tax treaty described in subparagraph (A)(i), is eligible”, added subcl. (I), and inserted “(II) is eligible under such treaty” before “for a reduced rate of withholding with respect to ordinary dividends paid by a real estate investment trust even if such person holds more than 10 percent of the stock of such real estate investment trust,”.
Subsec. (k)(3)(B)(ii)(II). Pub. L. 115–141, § 101(p)(5)(A), added “and” at end.
Subsec. (k)(3)(B)(ii)(III). Pub. L. 115–141, § 101(p)(5)(B), substituted “domestic corporation” for “United States corporation”.
Subsec. (l). Pub. L. 115–141, § 101(q)(1), substituted “Exception for qualified foreign pension funds” for “Exception for interests held by foreign pension funds” in heading.
Subsec. (l)(1). Pub. L. 115–141, § 101(q)(1), amended par. (1) generally. Prior to amendment, text read as follows: “This section shall not apply to any United States real property interest held directly (or indirectly through 1 or more partnerships) by, or to any distribution received from a real estate investment trust by—
“(A) a qualified foreign pension fund, or
“(B) any entity all of the interests of which are held by a qualified foreign pension fund.”
Subsec. (l)(2)(B). Pub. L. 115–141, § 101(q)(2), amended subpar.(B) generally. Prior to amendment, subpar. (B) read as follows: “which is established to provide retirement or pension benefits to participants or beneficiaries that are current or former employees (or persons designated by such employees) of one or more employers in consideration for services rendered,”.
Subsec. (l)(2)(D). Pub. L. 115–141, § 101(q)(3), substituted “with respect to which annual information about its beneficiaries is provided, or is otherwise available, to the relevant tax authorities” for “provides annual information reporting about its beneficiaries to the relevant tax authorities”.
Subsec. (l)(2)(E)(i). Pub. L. 115–141, § 101(q)(4)(A), substituted “such entity or arrangement” for “such entity”.
Subsec. (l)(2)(E)(ii). Pub. L. 115–141, § 101(q)(4)(B), substituted “, or such income is excluded from the gross income of such entity or arrangement or is taxed at a reduced rate” for “or such income is taxed at a reduced rate”.
2017—Subsec. (a)(2)(A). Pub. L. 115–97 substituted “section 55(b)(1)” for “section 55(b)(1)(A)” in introductory provisions.
2015—Subsec. (c)(1)(A). Pub. L. 114–113, § 322(a)(2)(A), inserted “or subsection (k)” after “subparagraph (B)” in introductory provisions.
Subsec. (c)(1)(B)(iii). Pub. L. 114–113, § 325(a), added cl. (iii).
Subsec. (h)(4). Pub. L. 114–113, § 322(b)(1)(B), inserted “and special rules” after “Definitions” in heading.
Subsec. (h)(4)(A). Pub. L. 114–113, § 133(a), struck out cl. (i) designation and heading before “The term ‘qualified investment entity’ means—”, redesignated subcls. (I) and (II) of former cl. (i) as cls. (i) and (ii), respectively, and struck out former cl. (ii). Prior to amendment, text of cl. (ii) read as follows: “Clause (i)(II) shall not apply after December 31, 2014. Notwithstanding the preceding sentence, an entity described in clause (i)(II) shall be treated as a qualified investment entity for purposes of applying paragraphs (1) and (5) and section 1445 with respect to any distribution by the entity to a nonresident alien individual or a foreign corporation which is attributable directly or indirectly to a distribution to the entity from a real estate investment trust.”
Subsec. (h)(4)(A)(ii). Pub. L. 114–113, § 322(b)(2), which directed insertion of “and for purposes of determining whether a real estate investment trust is a domestically controlled qualified investment entity under this subsection” after “real estate investment trust”, was repealed by Pub. L. 115–141, § 101(p)(6).
Subsec. (h)(4)(E). Pub. L. 114–113, § 322(b)(1)(A), added subpar. (E).
Subsec. (k). Pub. L. 114–113, § 322(a)(1), added subsec. (k).
Subsec. (l). Pub. L. 114–113, § 323(a), added subsec. (l).
2014—Subsec. (h)(4)(A)(ii). Pub. L. 113–295 substituted “December 31, 2014” for “December 31, 2013”.
2013—Subsec. (h)(4)(A)(ii). Pub. L. 112–240 substituted “December 31, 2013” for “December 31, 2011”.
2006—Subsec. (h)(1). Pub. L. 109–222, § 505(a)(1), in first sentence, substituted “a nonresident alien individual, a foreign corporation, or other qualified investment entity” for “a nonresident alien individual or a foreign corporation” and “such nonresident alien individual, foreign corporation, or other qualified investment entity” for “such nonresident alien individual or foreign corporation” and inserted second sentence and struck out former second sentence which read as follows: “Notwithstanding the preceding sentence, any distribution by a real estate investment trust with respect to any class of stock which is regularly traded on an established securities market located in the United States shall not be treated as gain recognized from the sale or exchange of a United States real property interest if the shareholder did not own more than 5 percent of such class of stock at any time during the 1-year period ending on the date of the distribution.”
Subsec. (h)(4)(A)(i)(II). Pub. L. 109–222, § 504(a), inserted “which is a United States real property holding corporation or which would be a United States real property holding corporation if the exceptions provided in subsections (c)(3) and (h)(2) did not apply to interests in any real estate investment trust or regulated investment company” after “any regulated investment company”.
Subsec. (h)(4)(A)(ii). Pub. L. 109–222, § 505(a)(2), inserted at end “Notwithstanding the preceding sentence, an entity described in clause (i)(II) shall be treated as a qualified investment entity for purposes of applying paragraphs (1) and (5) and section 1445 with respect to any distribution by the entity to a nonresident alien individual or a foreign corporation which is attributable directly or indirectly to a distribution to the entity from a real estate investment trust.”
Subsec. (h)(5). Pub. L. 109–222, § 506(a), added par. (5).
2004—Subsec. (h). Pub. L. 108–357, § 411(c)(5), substituted “certain investment entities” for “REITS” in heading.
Subsec. (h)(1). Pub. L. 108–357, § 418(a), inserted at end “Notwithstanding the preceding sentence, any distribution by a REIT with respect to any class of stock which is regularly traded on an established securities market located in the United States shall not be treated as gain recognized from the sale or exchange of a United States real property interest if the shareholder did not own more than 5 percent of such class of stock at any time during the taxable year.”
Pub. L. 108–357, § 411(c)(1), substituted “qualified investment entity” for “REIT” in two places.
Subsec. (h)(2). Pub. L. 108–357, § 411(c)(2), amended heading and text of par. (2) generally. Prior to amendment, text read as follows: “The term ‘United States real property interest’ does not include any interest in a domestically-controlled REIT.”
Subsec. (h)(3). Pub. L. 108–357, § 411(c)(2), amended heading and text of par. (3) generally. Prior to amendment, text read as follows: “In the case of a domestically-controlled REIT, rules similar to the rules of subsection (d) shall apply to the foreign ownership percentage of any gain.”
Subsec. (h)(4)(A). Pub. L. 108–357, § 411(c)(3), amended heading and text of subpar. (A) generally. Prior to amendment, text read as follows: “The term ‘REIT’ means a real estate investment trust.”
Subsec. (h)(4)(B). Pub. L. 108–357, § 411(c)(3), amended heading and text of subpar. (B) generally. Prior to amendment, text read as follows: “The term ‘domestically-controlled REIT’ means a REIT in which at all times during the testing period less than 50 percent in value of the stock was held directly or indirectly by foreign persons.”
Subsec. (h)(4)(C), (D)(iii). Pub. L. 108–357, § 411(c)(4), substituted “qualified investment entity” for “REIT”.
“(f) Distributions by DomesticCorporations to Foreign Shareholders.—If a domestic corporation distributes a United States real property interest to a nonresident alien individual or a foreign corporation in a distribution to which section 301 applies, notwithstanding any other provision of this chapter, the basis of such United States real property interest in the hands of such nonresident alien individual or foreign corporation shall not exceed—
“(1) a foreigncorporation adopts, or has adopted, a plan of liquidation described in section 334(b)(2)(A), and
then such foreigncorporation may make an election to be treated, for the period following June 18, 1980, as a domestic corporation pursuant to section 897(i)(1). Notwithstanding an election under the preceding sentence, any selling shareholder of such corporation shall be considered to have sold the stock of a foreign corporation.”
1986—Subsec. (a)(2). Pub. L. 99–514, § 701(e)(4)(G), substituted “21-percent” for “20-percent” in heading and amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: “In the case of any nonresident alien individual, the amount determined under section 55(a)(1) for the taxable year shall not be less than 20 percent of the lesser of—
“(ii) the individual’s net United Statesreal property gain for the taxable year.”
Subsec. (d). Pub. L. 99–514, § 631(e)(12), in heading, struck out “, etc.,” after “distributions”, and in text, struck out heading and designation for par. (1), redesignated subpar. (A) as par. (1), redesignated subpar. (B) as par. (2) and substituted “paragraph (1)” for “subparagraph (A)” in introductory provisions, redesignated cl. (i) and its subcls. (I) and (II) as subpar. (A) and cls. (i) and (ii), respectively, redesignated cl. (ii) as subpar. (B), and struck out former par. (2) which provided that section 337 not apply to any sale or exchange of a United States real property interest by a foreign corporation.
Subsec. (i)(1), (4). Pub. L. 99–514, § 1810(f)(1), inserted reference to section 1445.
1981—Subsec. (c)(1)(A)(i). Pub. L. 97–34, § 831(a)(1), defined “United States real property interest” to also mean an interest in real property located in the Virgin Islands.
Subsec. (c)(4)(B). Pub. L. 97–34, § 831(b), substituted “Assets” for “Interests” in heading and in first sentence “Under regulations prescribed by the Secretary, assets held by a partnership, trust or estate shall be treated as held” for “United States real property interests held by a partnership, trust, or estate shall be treated as owned” before “proportionately by its partners or beneficiaries”, and inserted provisions respecting treatment of an asset as used or held for use in a trade or business by a partner or beneficiary when used or held by the partnership, trust, or estate in a trade or business and attributing chain treatment of such trade or business to partnership, trust, or estate which are above the first such entity.
Subsec. (d)(1)(B). Pub. L. 97–34, § 831(c), substituted “Exceptions” for “Exception where there is a carryover basis” in heading, inserted introductory text “Gain shall not be recognized under subparagraph (A)”, inserted cls. (i)(I) and (ii), and substituted cl. (i)(II) the basis of the distributed property in the hands of the distributee is no greater than the adjusted basis of such property before the distribution, increased by the amount of gain (if any) recognized by the distributing corporation” for subpar. (B) provision “Subparagraph (A) shall not apply if the basis of the distributed property in the hands of the distributee is the same as the adjusted basis of such property before the distribution increased by the amount of any gain recognized by the distributing corporation.”
Subsec. (i). Pub. L. 97–34, § 831(d), in par. (1)(A) substituted “holds a United States real property interest” for “has a permanent establishment in the United States”, in par. (1)(B) substituted “treaty obligation of the United States the foreign corporation is entitled to nondiscriminatory treatment with respect to that interest” for “treaty, such permanent establishment may not be treated less favorably than domestic corporations carrying on the same activities”, in par. (3) inserted subpar. (A), designated existing provisions as subpar. (B), in subpar. (B) substituted “such other conditions as the Secretary may prescribe by regulations with respect to the corporation or its shareholders” for “such conditions as may be prescribed by the Secretary”, and prescribed percentage interest required for making the requisite election and application of constructive ownership rules in determining existence of the required percentage of a class of interest.
Subsecs. (j) to (l). Pub. L. 97–34, § 831(f), (g), added subsecs. (j) to (l).
Pub. L. 114–113, div. Q, title I, § 133(b), Dec. 18, 2015, 129 Stat. 3055, provided that:
The amendments made by this section [amending this section] shall take effect on January 1, 2015. Notwithstanding the preceding sentence, such amendments shall not apply with respect to the withholding requirement under section 1445 of the Internal Revenue Code of 1986 for any payment made before the date of the enactment of this Act [Dec. 18, 2015].
“(2)Amounts withheld on or before date of enactment.—In the case of a regulated investment company—
which makes a distribution after December 31, 2014, and before the date of the enactment of this Act, and
Pub. L. 114–113, div. Q, title III, § 322(c)(2), (3), Dec. 18, 2015, 129 Stat. 3102; as amended by Pub. L. 115–141, div. U, title I, § 101(p)(6), (7), Mar. 23, 2018, 132 Stat. 1167, provided that:
“(2)Determination of control.—
The amendments made by subsection (b)(1) [amending this section] shall apply with respect to testing periods (as defined in section 897(h)(4)(D) of the Internal Revenue Code of 1986) ending on or after the date of the enactment of this Act [Dec. 18, 2015].”
(3) [Repealed. Pub. L. 115–141, div. U, title I, § 101(p)(6), Mar. 23, 2018, 132 Stat. 1167].
Pub. L. 114–113, div. Q, title III, § 323(c), Dec. 18, 2015, 129 Stat. 3103, provided that:
“The amendments made by this section [amending this section and section 1445 of this title] shall apply to dispositions and distributions after the date of the enactment of this Act [Dec. 18, 2015].”
Pub. L. 114–113, div. Q, title III, § 325(b), Dec. 18, 2015, 129 Stat. 3103, provided that:
“The amendment made by this section [amending this section] shall apply to dispositions on or after the date of the enactment of this Act [Dec. 18, 2015].”
Pub. L. 113–295, div. A, title I, § 133(b), Dec. 19, 2014, 128 Stat. 4018, provided that:
The amendment made by this section [amending this section] shall take effect on January 1, 2014. Notwithstanding the preceding sentence, such amendment shall not apply with respect to the withholding requirement under section 1445 of the Internal Revenue Code of 1986 for any payment made before the date of the enactment of this Act [Dec. 19, 2014].
Pub. L. 112–240, title III, § 321(b), Jan. 2, 2013, 126 Stat. 2332, provided that:
The amendment made by subsection (a) [amending this section] shall take effect on January 1, 2012. Notwithstanding the preceding sentence, such amendment shall not apply with respect to the withholding requirement under section 1445 of the Internal Revenue Code of 1986 for any payment made before the date of the enactment of this Act [Jan. 2, 2013].
Pub. L. 111–312, title VII, § 749(b), Dec. 17, 2010, 124 Stat. 3320, provided that:
The amendment made by subsection (a) [amending this section] shall take effect on January 1, 2010. Notwithstanding the preceding sentence, such amendment shall not apply with respect to the withholding requirement under section 1445 of the Internal Revenue Code of 1986 for any payment made before the date of the enactment of this Act [Dec. 17, 2010].
which makes a distribution after December 31, 2009, and before the date of the enactment of this Act [Dec. 17, 2010]; and
Pub. L. 110–343, div. C, title II, § 208(b), Oct. 3, 2008, 122 Stat. 3865, as amended by Pub. L. 113–295, div. A, title II, § 211(a), Dec. 19, 2014, 128 Stat. 4032, provided that:
The amendment made by subsection (a) [amending this section] shall take effect on January 1, 2008. Notwithstanding the preceding sentence, such amendment shall not apply with respect to the withholding requirement under section 1445 of the Internal Revenue Code of 1986 for any payment made before October 4, 2008.
Pub. L. 109–222, title V, § 504(b), May 17, 2006, 120 Stat. 355, provided that:
“The amendment made by this section [amending this section] shall take effect as if included in the provisions of section 411 of the American Jobs Creation Act of 2004 [Pub. L. 108–357] to which it relates.”
Pub. L. 109–222, title V, § 506(c), May 17, 2006, 120 Stat. 358, provided that:
“The amendments made by this section [amending this section and section 1445 of this title] shall apply to taxable years beginning after December 31, 2005, except that such amendments shall not apply to any distribution, or substitute dividend payment, occurring before the date that is 30 days after the date of the enactment of this Act [May 17, 2006].”
Pub. L. 97–34, title VIII, § 831(i), Aug. 13, 1981, 95 Stat. 355, provided that:
“The amendments made by this section [amending this section and sections 862 and 6039C of this title and provisions set out as a note below] shall apply to dispositions after June 18, 1980, in taxable years ending after such date.”
Pub. L. 96–499, title XI, § 1125(a), (b), Dec. 5, 1980, 94 Stat. 2690, provided that:
Except as provided in subsection (b), the amendments made by this subtitle [subtitle C (§§ 1121–1125) of title XI of Pub. L. 96–499, enacting this section and provisions set out as notes under this section, and amending sections 861, 871, 882 of this title] shall apply to dispositions after June 18, 1980.
The amendments made by section 1123 [enacting section 6039C of this title and amending section 6652 of this title] shall apply to 1980 and subsequent calendar years. In applying such amendments to 1980, such calendar year shall be treated as beginning on June 19, 1980, and ending on December 31, 1980.”
Pub. L. 115–141, div. U, title I, § 101(p)(6), Mar. 23, 2018, 132 Stat. 1167, provided that:
“Section 322 of the Protecting Americans from Tax Hikes Act of 2015 [div. Q of Pub. L. 114–113] is amended by striking subsections (b)(2) [amending this section] and (c)(3) [set out as a note under this section], and the Internal Revenue Code of 1986 shall be applied as if such subsections, and amendments made thereby, had never been enacted.”
Pub. L. 99–514, title XII, § 1228, Oct. 22, 1986, 100 Stat. 2560, as amended by Pub. L. 100–647, title I, § 1012(m), Nov. 10, 1988, 102 Stat. 3513, provided that:
“(a)In General.—For purposes of section 897 of the Internal Revenue Code of 1986, gain shall not be recognized on the transfer, sale, exchange, or other disposition, of shares of stock of a United States real property holding company, if—
such United Statesreal property holding company is a Delaware corporation incorporated on January 17, 1984,
the transfer, sale, exchange, or other disposition is to any member of a qualified ownership group,
the recipient of the share of stock elects, for purposes of such section 897, a carryover basis in the transferred shares,
the transfer, sale, exchange, or other disposition is part of a single integrated plan, whereby the stock of the corporation described in paragraph (1) becomes owned directly by the 2 corporations specifically referred to in subsection (b) or by such 2 corporations and by 1 or both of their jointly owned direct subsidiaries,
within 20 days after each transfer, sale, exchange, or other disposition, the person making such transfer, sale, exchange, or other disposition notifies the Internal Revenue Service of the transaction, the date of the transaction, the basis of the stock involved, the holding period for such stock, and such other information as the Internal Revenue Service may require, and
the integrated plan is completed before the date 4 years after the date of the enactment of the Technical and Miscellaneous Revenue Act of 1988 [Nov. 10, 1988].
“(b)Member of a Qualified Ownership Group.—
For purposes of this section, the term ‘member of a qualified ownership group’ means a corporation incorporated on June 16, 1890, under the laws of the Netherlands or a corporation incorporated on October 18, 1897, under the laws of the United Kingdom or any corporation owned directly or indirectly by either or both such corporations.
“(c) [Repealed. Pub. L. 100–647, title I, § 1012(m)(2), Nov. 10, 1988, 102 Stat. 3513.]
The provisions of this section shall take effect on the date of the enactment of this section [Oct. 22, 1986].”
Pub. L. 96–499, title XI, § 1125(c), Dec. 5, 1980, 94 Stat. 2690, as amended by Pub. L. 97–34, title VIII, § 831(h), Aug. 13, 1981, 95 Stat. 355; Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
Except as provided in paragraph (2), after December 31, 1984, nothing in section 894(a) or 7852(d) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] or in any other provision of law shall be treated as requiring, by reason of any treaty obligation of the United States, an exemption from (or reduction of) any tax imposed by section 871 or 882 of such Code on a gain described in section 897 of such Code.
any treaty (hereinafter in this paragraph referred to as the ‘old treaty’) is renegotiated to resolve conflicts between such treaty and the provisions of section 897 of the Internal Revenue Code of 1986, and
the new treaty is signed on or after January 1, 1981, and before January 1, 1985,
Pub. L. 96–499, title XI, § 1125(d), Dec. 5, 1980, 94 Stat. 2691, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
In the case of any disposition after December 31, 1979, of a United States real property interest (as defined in section 897(c) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]) to a related person (within the meaning of section 453(f)(1) of such Code), the basis of the interest in the hands of the person acquiring it shall be reduced by the amount of any nontaxed gain.
because the disposition occurred before June 19, 1980, or
because of any treaty obligation of the United States.”