---
kind: "section"
citation: "26 U.S.C. § 897"
title: "26"
title_heading: "Internal Revenue Code"
number: "897"
heading: "Disposition of investment in United States real property"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/26/897"
units:
  - "Subtitle A — Income Taxes"
  - "Chapter 1 — Normal Taxes and Surtaxes"
  - "Subchapter N — Tax Based on Income From Sources Within or Without the United States"
  - "Part II — Nonresident Aliens and Foreign Corporations"
  - "Subpart D — Miscellaneous Provisions"
---

# §897. Disposition of investment in United States real property

- (a) **General rule—**
  - (1) **Treatment as effectively connected with United States trade or business—** For purposes of this title, gain or loss of a nonresident alien individual or a foreign corporation from the [disposition](/usc/26/424.md?p=c-1) of a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interest](/usc/26/856.md?p=f-1) shall be taken into account—
    - (A) in the case of a nonresident alien individual, under [section 871(b)(1)](/usc/26/871.md?p=b-1), or
    - (B) in the case of a foreign corporation, under [section 882(a)(1)](/usc/26/882.md?p=a-1),

    as if the [taxpayer](/usc/26/1313.md?p=b) were engaged in a [trade or business within the United States](/usc/26/864.md?p=b) during the taxable year and as if such gain or loss were effectively connected with such [trade or business](/usc/26/1402.md?p=c).

  - (2) **Minimum tax on nonresident alien individuals—**
    - (A) **In general—** In the case of any nonresident alien individual, the taxable excess for purposes of [section 55(b)(1)](/usc/26/55.md?p=b-1) shall not be less than the lesser of—
      - (i) the individual’s alternative minimum [taxable income](/usc/26/63.md?p=a) (as defined in [section 55(b)(1)(D)](/usc/26/55.md?p=b-1-D)) for the taxable year, or
      - (ii) the individual’s net [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) gain for the taxable year.
    - (B) **Net United States real property gain—** For purposes of [subparagraph (A)](#a-2-A), the term “net [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) gain” means the excess of—
      - (i) the aggregate of the gains for the taxable year from [dispositions](/usc/26/424.md?p=c-1) of [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interests](/usc/26/856.md?p=f-1), over
      - (ii) the aggregate of the losses for the taxable year from [dispositions](/usc/26/424.md?p=c-1) of such [interests](/usc/26/856.md?p=f-1).
- (b) **Limitation on losses of individuals—** In the case of an individual, a loss shall be taken into account under [subsection (a)](#a) only to the extent such loss would be taken into account under [section 165(c)](/usc/26/165.md?p=c) (determined without regard to [subsection (a)](#a) of this section).
- (c) **United States real property interest—** For purposes of this section—
  - (1) **United States real property interest—**
    - (A) **In general—** Except as provided in [subparagraph (B)](#c-1-B) or [subsection (k)](#k), the term “[United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interest](/usc/26/856.md?p=f-1)” means—
      - (i) an [interest](/usc/26/856.md?p=f-1) in real [property](/usc/26/317.md?p=a) (including an [interest](/usc/26/856.md?p=f-1) in a mine, well, or other natural deposit) located in the [United States](/usc/26/993.md?p=g) or the Virgin Islands, and
      - (ii) any [interest](/usc/26/856.md?p=f-1) (other than an [interest](/usc/26/856.md?p=f-1) solely as a creditor) in any domestic corporation unless the [taxpayer](/usc/26/1313.md?p=b) establishes (at such time and in such manner as the Secretary by regulations prescribes) that such corporation was at no time a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) holding corporation during the shorter of—
        - (I) the period after June 18, 1980, during which the [taxpayer](/usc/26/1313.md?p=b) held such [interest](/usc/26/856.md?p=f-1), or
        - (II) the 5-year period ending on the date of the [disposition](/usc/26/424.md?p=c-1) of such [interest](/usc/26/856.md?p=f-1).
    - (B) **Exclusion for interest in certain corporations—** The term “[United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interest](/usc/26/856.md?p=f-1)” does not include any [interest](/usc/26/856.md?p=f-1) in a corporation if—
      - (i) as of the date of the [disposition](/usc/26/424.md?p=c-1) of such [interest](/usc/26/856.md?p=f-1), such corporation did not hold any [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interests](/usc/26/856.md?p=f-1),
      - (ii) all of the [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interests](/usc/26/856.md?p=f-1) held by such corporation at any time during the shorter of the periods described in [subparagraph (A)(ii)](#c-1-A-ii)—
        - (I) were disposed of in transactions in which the full amount of the gain (if any) was recognized, or
        - (II) ceased to be [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interests](/usc/26/856.md?p=f-1) by reason of the application of this subparagraph to 1 or more other corporations, and
      - (iii) neither such corporation nor any predecessor of such corporation was a [regulated investment company](/usc/26/851.md?p=a) or a [real estate investment trust](/usc/26/856.md?p=a) at any time during the shorter of the periods described in [subparagraph (A)(ii)](#c-1-A-ii).
  - (2) **United States real property holding corporation—** The term “[United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) holding corporation” means any corporation if—
    - (A) the fair market [value](/usc/26/851.md?p=c-4) of its [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interests](/usc/26/856.md?p=f-1) equals or exceeds 50 percent of
    - (B) the fair market [value](/usc/26/851.md?p=c-4) of—
      - (i) its [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interests](/usc/26/856.md?p=f-1),
      - (ii) its [interests in real property](/usc/26/856.md?p=c-5-C) located outside the [United States](/usc/26/993.md?p=g), plus
      - (iii) any other of its assets which are used or held for use in a [trade or business](/usc/26/1402.md?p=c).
  - (3) **Exception for stock regularly traded on established securities markets—** If any class of [stock](/usc/26/1504.md?p=a-4) of a corporation is regularly traded on an established [securities](/usc/26/368.md?p=a-2-F-vii) market, [stock](/usc/26/1504.md?p=a-4) of such class shall be treated as a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interest](/usc/26/856.md?p=f-1) only in the case of a person who, at some time during the shorter of the periods described in [paragraph (1)(A)(ii)](#c-1-A-ii), held more than 5 percent of such class of [stock](/usc/26/1504.md?p=a-4).
  - (4) **Interests held by foreign corporations and by partnerships, trusts, and estates—** For purposes of determining whether any corporation is a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) holding corporation—
    - (A) **Foreign corporations—** [Paragraph (1)(A)(ii)](#c-1-A-ii) shall be applied by substituting “any corporation (whether foreign or domestic)” for “any domestic corporation”.
    - (B) **Assets held by partnerships, etc.** Under regulations prescribed by the Secretary, assets held by a [partnership](/usc/26/761.md?p=a), trust, or [estate](/usc/26/1361.md?p=c-3) shall be treated as held proportionately by its [partners](/usc/26/761.md?p=b) or beneficiaries. Any asset treated as held by a [partner](/usc/26/761.md?p=b) or beneficiary by reason of this subparagraph which is used or held for use by the [partnership](/usc/26/761.md?p=a), trust, or [estate](/usc/26/1361.md?p=c-3) in a [trade or business](/usc/26/1402.md?p=c) shall be treated as so used or held by the [partner](/usc/26/761.md?p=b) or beneficiary. Any asset treated as held by a [partner](/usc/26/761.md?p=b) or beneficiary by reason of this subparagraph shall be so treated for purposes of applying this subparagraph successively to [partnerships](/usc/26/761.md?p=a), trusts, or [estates](/usc/26/1361.md?p=c-3) which are above the first [partnership](/usc/26/761.md?p=a), trust, or [estate](/usc/26/1361.md?p=c-3) in a chain thereof.
  - (5) **Treatment of controlling interests—**
    - (A) **In general—** Under regulations, for purposes of determining whether any corporation is a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) holding corporation, if any corporation (hereinafter in this paragraph referred to as the “first corporation”) holds a controlling [interest](/usc/26/856.md?p=f-1) in a second corporation—
      - (i) the [stock](/usc/26/1504.md?p=a-4) which the first corporation holds in the second corporation shall not be taken into account,
      - (ii) the first corporation shall be treated as holding a portion of each asset of the second corporation equal to the percentage of the fair market [value](/usc/26/851.md?p=c-4) of the [stock](/usc/26/1504.md?p=a-4) of the second corporation represented by the [stock](/usc/26/1504.md?p=a-4) held by the first corporation, and
      - (iii) any asset treated as held by the first corporation by reason of [clause (ii)](#c-5-A-ii) which is used or held for use by the second corporation in a [trade or business](/usc/26/1402.md?p=c) shall be treated as so used or held by the first corporation.

      Any asset treated as held by the first corporation by reason of the preceding sentence shall be so treated for purposes of applying the preceding sentence successively to corporations which are above the first corporation in a chain of corporations.

    - (B) **Controlling interest—** For purposes of [subparagraph (A)](#c-5-A), the term “controlling [interest](/usc/26/856.md?p=f-1)” means 50 percent or more of the fair market [value](/usc/26/851.md?p=c-4) of all classes of [stock](/usc/26/1504.md?p=a-4) of a corporation.
  - (6) **Other special rules—**
    - (A) **Interest in real property—** The term “[interest](/usc/26/856.md?p=f-1) in real [property](/usc/26/317.md?p=a)” includes fee ownership and co-ownership of land or improvements thereon, leaseholds of land or improvements thereon, options to acquire land or improvements thereon, and options to acquire leaseholds of land or improvements thereon.
    - (B) **Real property includes associated personal property—** The term “real [property](/usc/26/317.md?p=a)” includes movable walls, furnishings, and other personal [property](/usc/26/317.md?p=a) associated with the use of the real [property](/usc/26/317.md?p=a).
    - (C) **Constructive ownership rules—** For purposes of determining under [paragraph (3)](#c-3) whether any person holds more than 5 percent of any class of [stock](/usc/26/1504.md?p=a-4) and of determining under [paragraph (5)](#c-5) whether a person holds a controlling [interest](/usc/26/856.md?p=f-1) in any corporation, [section 318(a)](/usc/26/318.md?p=a) shall apply (except that paragraphs [(2)(C)](/usc/26/318.md?p=a-2-C) and [(3)(C)](/usc/26/318.md?p=a-3-C) of section 318(a) shall be applied by substituting “5 percent” for “50 percent”).
- (d) **Treatment of distributions by foreign corporations—**
  - (1) **In general—** Except to the extent otherwise provided in regulations, notwithstanding any other provision of this chapter, gain shall be recognized by a foreign corporation on the distribution (including a distribution in liquidation or redemption) of a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interest](/usc/26/856.md?p=f-1) in an amount equal to the excess of the fair market [value](/usc/26/851.md?p=c-4) of such [interest](/usc/26/856.md?p=f-1) (as of the time of the distribution) over its adjusted basis.
  - (2) **Exceptions—** Gain shall not be recognized under [paragraph (1)](#d-1)—
    - (A) if—
      - (i) at the time of the receipt of the distributed [property](/usc/26/317.md?p=a), the distributee would be subject to taxation under this chapter on a subsequent [disposition](/usc/26/424.md?p=c-1) of the distributed [property](/usc/26/317.md?p=a), and
      - (ii) the basis of the distributed [property](/usc/26/317.md?p=a) in the hands of the distributee is no greater than the adjusted basis of such [property](/usc/26/317.md?p=a) before the distribution, increased by the amount of gain (if any) recognized by the distributing corporation, or
    - (B) if such nonrecognition is provided in regulations prescribed by the Secretary under [subsection (e)(2)](#e-2).
- (e) **Coordination with nonrecognition provisions—**
  - (1) **In general—** Except to the extent otherwise provided in [subsection (d)](#d) and paragraph (2) of this subsection, any nonrecognition provision shall apply for purposes of this section to a transaction only in the case of an exchange of a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interest](/usc/26/856.md?p=f-1) for an [interest](/usc/26/856.md?p=f-1) the sale of which would be subject to taxation under this chapter.
  - (2) **Regulations—** The Secretary shall prescribe regulations (which are necessary or appropriate to prevent the avoidance of Federal income taxes) providing—
    - (A) the extent to which nonrecognition provisions shall, and shall not, apply for purposes of this section, and
    - (B) the extent to which—
      - (i) transfers of [property](/usc/26/317.md?p=a) in [reorganization](/usc/26/368.md?p=a-1), and
      - (ii) changes in [interests](/usc/26/856.md?p=f-1) in, or distributions from, a [partnership](/usc/26/761.md?p=a), trust, or [estate](/usc/26/1361.md?p=c-3),

      shall be treated as sales of [property](/usc/26/317.md?p=a) at fair market [value](/usc/26/851.md?p=c-4).

  - (3) **Nonrecognition provision defined—** For purposes of this subsection, the term “nonrecognition provision” means any provision of this title for not recognizing gain or loss.
- (f) **Repealed. Pub. L. 104–188, title I, § 1702(g)(2), Aug. 20, 1996, 110 Stat. 1873—**
- (g) **Special rule for sales of interest in partnerships, trusts, and estates—** Under regulations prescribed by the Secretary, the amount of any money, and the fair market [value](/usc/26/851.md?p=c-4) of any [property](/usc/26/317.md?p=a), received by a nonresident alien individual or foreign corporation in exchange for all or part of its [interest](/usc/26/856.md?p=f-1) in a [partnership](/usc/26/761.md?p=a), trust, or [estate](/usc/26/1361.md?p=c-3) shall, to the extent attributable to [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interests](/usc/26/856.md?p=f-1), be considered as an amount received from the [sale or exchange](/usc/26/864.md?p=c-8-D) in the [United States](/usc/26/993.md?p=g) of such [property](/usc/26/317.md?p=a).
- (h) **Special rules for certain investment entities—** For purposes of this section—
  - (1) **Look-through of distributions—** Any distribution by a qualified investment entity to a nonresident alien individual, a foreign corporation, or other qualified investment entity shall, to the extent attributable to gain from sales or exchanges by the qualified investment entity of [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interests](/usc/26/856.md?p=f-1), be treated as gain recognized by such nonresident alien individual, foreign corporation, or other qualified investment entity from the [sale or exchange](/usc/26/864.md?p=c-8-D) of a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interest](/usc/26/856.md?p=f-1). Notwithstanding the preceding sentence, any distribution by a qualified investment entity to a nonresident alien individual or a foreign corporation with respect to any class of [stock](/usc/26/1504.md?p=a-4) which is regularly traded on an established [securities](/usc/26/368.md?p=a-2-F-vii) market located in the [United States](/usc/26/993.md?p=g) shall not be treated as gain recognized from the [sale or exchange](/usc/26/864.md?p=c-8-D) of a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interest](/usc/26/856.md?p=f-1) if such individual or corporation did not own more than 5 percent of such class of [stock](/usc/26/1504.md?p=a-4) at any time during the 1-year period ending on the date of such distribution.
  - (2) **Sale of stock in domestically controlled entity not taxed—** The term “[United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interest](/usc/26/856.md?p=f-1)” does not include any [interest](/usc/26/856.md?p=f-1) in a domestically controlled qualified investment entity.
  - (3) **Distributions by domestically controlled qualified investment entities—** In the case of a domestically controlled qualified investment entity, rules similar to the rules of [subsection (d)](#d) shall apply to the foreign ownership percentage of any gain.
  - (4) **Definitions and special rules—**
    - (A) **Qualified investment entity—** The term “qualified investment entity” means—
      - (i) any [real estate investment trust](/usc/26/856.md?p=a), and
      - (ii) any [regulated investment company](/usc/26/851.md?p=a) which is a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) holding corporation or which would be a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) holding corporation if the exceptions provided in subsections [(c)(3)](#c-3) and [(h)(2)](#h-2) did not apply to [interests](/usc/26/856.md?p=f-1) in any [real estate investment trust](/usc/26/856.md?p=a) or [regulated investment company](/usc/26/851.md?p=a).
    - (B) **Domestically controlled—** The term “domestically controlled qualified investment entity” means any qualified investment entity in which at all times during the testing period less than 50 percent in [value](/usc/26/851.md?p=c-4) of the [stock](/usc/26/1504.md?p=a-4) was held directly or [indirectly](/usc/26/101.md?p=a-3-B) by foreign persons.
    - (C) **Foreign ownership percentage—** The term “foreign ownership percentage” means that percentage of the [stock](/usc/26/1504.md?p=a-4) of the qualified investment entity which was held (directly or [indirectly](/usc/26/101.md?p=a-3-B)) by foreign persons at the time during the testing period during which the direct and indirect ownership of [stock](/usc/26/1504.md?p=a-4) by foreign persons was greatest.
    - (D) **Testing period—** The term “testing period” means whichever of the following periods is the shortest:
      - (i) the period beginning on June 19, 1980, and ending on the date of the [disposition](/usc/26/424.md?p=c-1) or of the distribution, as the case may be,
      - (ii) the 5-year period ending on the date of the [disposition](/usc/26/424.md?p=c-1) or of the distribution, as the case may be, or
      - (iii) the period during which the qualified investment entity was in existence.
    - (E) **Special ownership rules—** For purposes of determining the holder of [stock](/usc/26/1504.md?p=a-4) under subparagraphs [(B)](#h-4-B) and [(C)](#h-4-C)—
      - (i) in the case of any class of [stock](/usc/26/1504.md?p=a-4) of the qualified investment entity which is regularly traded on an established [securities](/usc/26/368.md?p=a-2-F-vii) market in the [United States](/usc/26/993.md?p=g), a person holding less than 5 percent of such class of [stock](/usc/26/1504.md?p=a-4) at all times during the testing period shall be treated as a [United States](/usc/26/993.md?p=g) person unless the qualified investment entity has actual knowledge that such person is not a [United States](/usc/26/993.md?p=g) person,
      - (ii) any [stock](/usc/26/1504.md?p=a-4) in the qualified investment entity held by another qualified investment entity—
        - (I) any class of [stock](/usc/26/1504.md?p=a-4) of which is regularly traded on an established [securities](/usc/26/368.md?p=a-2-F-vii) market, or
        - (II) which is a [regulated investment company](/usc/26/851.md?p=a) which issues redeemable [securities](/usc/26/368.md?p=a-2-F-vii) (within the meaning of section 2 of the Investment Company Act of 1940),

      shall be treated as held by a foreign person, except that if such other qualified investment entity is domestically controlled (determined after application of this subparagraph), such [stock](/usc/26/1504.md?p=a-4) shall be treated as held by a [United States](/usc/26/993.md?p=g) person, and

      - (iii) any [stock](/usc/26/1504.md?p=a-4) in the qualified investment entity held by any other qualified investment entity not described in subclause [(I)](#h-4-E-ii-I) or [(II)](#h-4-E-ii-II) of clause (ii) shall only be treated as held by a [United States](/usc/26/993.md?p=g) person in proportion to the [stock](/usc/26/1504.md?p=a-4) of such other qualified investment entity which is (or is treated under clause [(ii)](#h-4-E-ii) or [(iii)](#h-4-E-iii) as) held by a [United States](/usc/26/993.md?p=g) person.
  - (5) **Treatment of certain wash sale transactions—**
    - (A) **In general—** If an [interest](/usc/26/856.md?p=f-1) in a domestically controlled qualified investment entity is disposed of in an applicable wash sale transaction, the [taxpayer](/usc/26/1313.md?p=b) shall, for purposes of this section, be treated as having gain from the [sale or exchange](/usc/26/864.md?p=c-8-D) of a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interest](/usc/26/856.md?p=f-1) in an amount equal to the portion of the distribution described in [subparagraph (B)](#h-5-B) with respect to such [interest](/usc/26/856.md?p=f-1) which, but for the [disposition](/usc/26/424.md?p=c-1), would have been treated by the [taxpayer](/usc/26/1313.md?p=b) as gain from the [sale or exchange](/usc/26/864.md?p=c-8-D) of a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interest](/usc/26/856.md?p=f-1) under [paragraph (1)](#h-1).
    - (B) **Applicable wash sales transaction—** For purposes of this paragraph—
      - (i) **In general—** The term “applicable wash sales transaction” means any transaction (or series of transactions) under which a nonresident alien individual, foreign corporation, or qualified investment entity—
        - (I) disposes of an [interest](/usc/26/856.md?p=f-1) in a domestically controlled qualified investment entity during the 30-day period preceding the ex-[dividend](/usc/26/316.md?p=a) date of a distribution which is to be made with respect to the [interest](/usc/26/856.md?p=f-1) and any portion of which, but for the [disposition](/usc/26/424.md?p=c-1), would have been treated by the [taxpayer](/usc/26/1313.md?p=b) as gain from the [sale or exchange](/usc/26/864.md?p=c-8-D) of a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interest](/usc/26/856.md?p=f-1) under [paragraph (1)](#h-1), and
        - (II) acquires, or enters into a [contract](/usc/26/101.md?p=f-3-A) or option to acquire, a substantially identical [interest](/usc/26/856.md?p=f-1) in such entity during the 61-day period beginning with the 1st day of the 30-day period described in [subclause (I)](#h-5-B-i-I).

      For purposes of subclause (II), a nonresident alien individual, foreign corporation, or qualified investment entity shall be treated as having acquired any [interest](/usc/26/856.md?p=f-1) acquired by a person related (within the meaning of section [267(b)](/usc/26/267.md?p=b) or [707(b)(1)](/usc/26/707.md?p=b-1)) to the individual, corporation, or entity, and any [interest](/usc/26/856.md?p=f-1) which such person has entered into any [contract](/usc/26/101.md?p=f-3-A) or option to acquire.

      - (ii) **Application to substitute dividend and similar payments—** [Subparagraph (A)](#h-5-A) shall apply to—
        - (I) any substitute [dividend](/usc/26/316.md?p=a) payment (within the meaning of [section 861](/usc/26/861.md)), or
        - (II) any other similar payment specified in regulations which the Secretary determines necessary to prevent avoidance of the purposes of this paragraph.

      The portion of any such payment treated by the [taxpayer](/usc/26/1313.md?p=b) as gain from the [sale or exchange](/usc/26/864.md?p=c-8-D) of a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interest](/usc/26/856.md?p=f-1) under [subparagraph (A)](#h-5-A) by reason of this clause shall be equal to the portion of the distribution such payment is in lieu of which would have been so treated but for the transaction giving rise to such payment.

      - (iii) **Exception where distribution actually received—** A transaction shall not be treated as an applicable wash sales transaction if the nonresident alien individual, foreign corporation, or qualified investment entity receives the distribution described in [clause (i)(I)](#h-5-B-i-I) with respect to either the [interest](/usc/26/856.md?p=f-1) which was disposed of, or acquired, in the transaction.
      - (iv) **Exception for certain publicly traded stock—** A transaction shall not be treated as an applicable wash sales transaction if it involves the [disposition](/usc/26/424.md?p=c-1) of any class of [stock](/usc/26/1504.md?p=a-4) in a qualified investment entity which is regularly traded on an established [securities](/usc/26/368.md?p=a-2-F-vii) market within the [United States](/usc/26/993.md?p=g) but only if the nonresident alien individual, foreign corporation, or qualified investment entity did not own more than 5 percent of such class of [stock](/usc/26/1504.md?p=a-4) at any time during the 1-year period ending on the date of the distribution described in [clause (i)(I)](#h-5-B-i-I).
- (i) **Election by foreign corporation to be treated as domestic corporation—**
  - (1) **In general—** If—
    - (A) a foreign corporation holds a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interest](/usc/26/856.md?p=f-1), and
    - (B) under any treaty obligation of the [United States](/usc/26/993.md?p=g) the foreign corporation is entitled to nondiscriminatory treatment with respect to that [interest](/usc/26/856.md?p=f-1),

    then such foreign corporation may make an election to be treated as a domestic corporation for purposes of this section, [section 1445](/usc/26/1445.md), and section 6039C.

  - (2) **Revocation only with consent—** Any election under [paragraph (1)](#i-1), once made, may be revoked only with the consent of the Secretary.
  - (3) **Making of election—** An election under [paragraph (1)](#i-1) may be made only—
    - (A) if all of the owners of all classes of [interests](/usc/26/856.md?p=f-1) (other than [interests](/usc/26/856.md?p=f-1) solely as a creditor) in the foreign corporation at the time of the election consent to the making of the election and agree that gain, if any, from the [disposition](/usc/26/424.md?p=c-1) of such [interest](/usc/26/856.md?p=f-1) after June 18, 1980, which would be taken into account under [subsection (a)](#a) shall be taxable notwithstanding any provision to the contrary in a treaty to which the [United States](/usc/26/993.md?p=g) is a party, and
    - (B) subject to such other conditions as the Secretary may prescribe by regulations with respect to the corporation or its shareholders.

    In the case of a class of [interest](/usc/26/856.md?p=f-1) (other than an [interest](/usc/26/856.md?p=f-1) solely as a creditor) which is regularly traded on an established [securities](/usc/26/368.md?p=a-2-F-vii) market, the consent described in [subparagraph (A)](#i-3-A) need only be made by any person if such person held more than 5 percent of such class of [interest](/usc/26/856.md?p=f-1) at some time during the shorter of the periods described in [subsection (c)(1)(A)(ii)](#c-1-A-ii). The constructive ownership rules of [subsection (c)(6)(C)](#c-6-C) shall apply in determining whether a person held more than 5 percent of a class of [interest](/usc/26/856.md?p=f-1).

  - (4) **Exclusive method of claiming nondiscrimination—** The election provided by [paragraph (1)](#i-1) shall be the exclusive remedy for any person claiming discriminatory treatment with respect to this section, [section 1445](/usc/26/1445.md), and section 6039C.
- (j) **Certain contributions to capital—** Except to the extent otherwise provided in regulations, gain shall be recognized by a nonresident alien individual or foreign corporation on the transfer of a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interest](/usc/26/856.md?p=f-1) 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—
  - (1) the fair market [value](/usc/26/851.md?p=c-4) of such [property](/usc/26/317.md?p=a) transferred, over
  - (2) the sum of—
    - (A) the adjusted basis of such [property](/usc/26/317.md?p=a) in the hands of the transferor, plus
    - (B) the amount of gain, if any, recognized to the transferor under any other provision at the time of the transfer.
- (k) **Special rules relating to real estate investment trusts—**
  - (1) **Increase in percentage ownership for exceptions for persons holding publicly traded stock—**
    - (A) **Dispositions—** In the case of any [disposition](/usc/26/424.md?p=c-1) of [stock](/usc/26/1504.md?p=a-4) in a [real estate investment trust](/usc/26/856.md?p=a), paragraphs [(3)](#c-3) and [(6)(C)](#c-6-C) of subsection (c) shall each be applied by substituting “more than 10 percent” for “more than 5 percent”.
    - (B) **Distributions—** In the case of any distribution from a [real estate investment trust](/usc/26/856.md?p=a), [subsection (h)(1)](#h-1) shall be applied by substituting “10 percent” for “5 percent”.
  - (2) **Stock held by qualified shareholders not treated as United States real property interest—**
    - (A) **In general—** Except as provided in [subparagraph (B)](#k-2-B)—
      - (i) [stock](/usc/26/1504.md?p=a-4) of a [real estate investment trust](/usc/26/856.md?p=a) which is held directly (or [indirectly](/usc/26/101.md?p=a-3-B) through 1 or more [partnerships](/usc/26/761.md?p=a)) by a qualified shareholder shall not be treated as a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interest](/usc/26/856.md?p=f-1), and
      - (ii) notwithstanding [subsection (h)(1)](#h-1), any distribution to a qualified shareholder shall not be treated as gain recognized from the [sale or exchange](/usc/26/864.md?p=c-8-D) of a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interest](/usc/26/856.md?p=f-1) to the extent the [stock](/usc/26/1504.md?p=a-4) of the [real estate investment trust](/usc/26/856.md?p=a) held by such qualified shareholder is not treated as a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interest](/usc/26/856.md?p=f-1) under [clause (i)](#k-2-A-i).
    - (B) **Exception—** In the case of a qualified shareholder with one or more applicable investors—
      - (i) [subparagraph (A)(i)](#k-2-A-i) shall not apply to the [applicable percentage](/usc/26/414.md?p=l-2-B) of the [stock](/usc/26/1504.md?p=a-4) of the [real estate investment trust](/usc/26/856.md?p=a) held by the qualified shareholder, and
      - (ii) the [applicable percentage](/usc/26/414.md?p=l-2-B) of the amounts realized by the qualified shareholder with respect to any [disposition](/usc/26/424.md?p=c-1) of [stock](/usc/26/1504.md?p=a-4) in the [real estate investment trust](/usc/26/856.md?p=a) or with respect to any distribution from the [real estate investment trust](/usc/26/856.md?p=a) attributable to gain from sales or exchanges of a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interest](/usc/26/856.md?p=f-1) shall be treated as amounts realized from the [disposition](/usc/26/424.md?p=c-1) of [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interests](/usc/26/856.md?p=f-1).
    - (C) **Special rule for certain distributions treated as sale or exchange—** If a distribution by a [real estate investment trust](/usc/26/856.md?p=a) is treated as a [sale or exchange](/usc/26/864.md?p=c-8-D) of [stock](/usc/26/1504.md?p=a-4) under section [301(c)(3)](/usc/26/301.md?p=c-3), [302](/usc/26/302.md), or [331](/usc/26/331.md) with respect to a qualified shareholder—
      - (i) in the case of an applicable investor, [subparagraph (B)](#k-2-B) shall apply with respect to such distribution, and
      - (ii) in the case of any other person, such distribution shall be treated under [section 857(b)(3)(F)](/usc/26/857.md?p=b-3-F)[^1] as a [dividend](/usc/26/316.md?p=a) from a [real estate investment trust](/usc/26/856.md?p=a) notwithstanding any other provision of this title.
    - (D) **Applicable investor—** For purposes of this subsection, the term “applicable investor” means, with respect to any qualified shareholder holding [stock](/usc/26/1504.md?p=a-4) in a [real estate investment trust](/usc/26/856.md?p=a), a person (other than a qualified shareholder) which—
      - (i) holds an [interest](/usc/26/856.md?p=f-1) (other than an [interest](/usc/26/856.md?p=f-1) solely as a creditor) in such qualified shareholder, and
      - (ii) holds more than 10 percent of the [stock](/usc/26/1504.md?p=a-4) of such [real estate investment trust](/usc/26/856.md?p=a) (whether or not by reason of the person’s ownership [interest](/usc/26/856.md?p=f-1) in the qualified shareholder).
    - (E) **Constructive ownership rules—** For purposes of subparagraphs [(B)(i)](#k-2-B-i) and [(D)](#k-2-D), the constructive ownership rules under [subsection (c)(6)(C)](#c-6-C) shall apply.
    - (F) **Applicable percentage—** For purposes of [subparagraph (B)](#k-2-B), the term “[applicable percentage](/usc/26/414.md?p=l-2-B)” means the percentage of the [value](/usc/26/851.md?p=c-4) of the [interests](/usc/26/856.md?p=f-1) (other than [interests](/usc/26/856.md?p=f-1) held solely as a creditor) in the qualified shareholder held by applicable investors.
  - (3) **Qualified shareholder—** For purposes of this subsection—
    - (A) **In general—** The term “qualified shareholder” means a foreign person which—
      - (i)
        - (I) is eligible for benefits of a comprehensive income tax treaty with the [United States](/usc/26/993.md?p=g) which includes an exchange of information program and the principal class of [interests](/usc/26/856.md?p=f-1) of which is listed and regularly traded on 1 or more recognized [stock](/usc/26/1504.md?p=a-4) exchanges (as defined in such comprehensive income tax treaty), or
        - (II) is a foreign [partnership](/usc/26/761.md?p=a) that is created or organized under foreign law as a limited [partnership](/usc/26/761.md?p=a) in a jurisdiction that has an agreement for the exchange of information with respect to taxes with the [United States](/usc/26/993.md?p=g) and has a class of limited [partnership](/usc/26/761.md?p=a) units which is regularly traded on the New York [Stock](/usc/26/1504.md?p=a-4) Exchange or Nasdaq [Stock](/usc/26/1504.md?p=a-4) Market and such class of limited [partnership](/usc/26/761.md?p=a) units [value](/usc/26/851.md?p=c-4) is greater than 50 percent of the [value](/usc/26/851.md?p=c-4) of all the [partnership](/usc/26/761.md?p=a) units,
      - (ii) is a qualified collective investment vehicle, and
      - (iii) 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](/usc/26/856.md?p=f-1) described in subclause [(I)](#k-3-A-i-I) or [(II)](#k-3-A-i-II) of clause (i), as the case may be.
    - (B) **Qualified collective investment vehicle—** For purposes of this subsection, the term “qualified collective investment vehicle” means a foreign person—
      - (i) which—
        - (I) is eligible for benefits under the comprehensive income tax treaty described in [subparagraph (A)(i)(I)](#k-3-A-i-I), but only if the [dividends](/usc/26/316.md?p=a) article of such treaty imposes conditions on the benefits allowable in the case of [dividends](/usc/26/316.md?p=a) paid by a [real estate investment trust](/usc/26/856.md?p=a), and
        - (II) is eligible under such treaty for a reduced rate of withholding with respect to ordinary [dividends](/usc/26/316.md?p=a) paid by a [real estate investment trust](/usc/26/856.md?p=a) even if such person holds more than 10 percent of the [stock](/usc/26/1504.md?p=a-4) of such [real estate investment trust](/usc/26/856.md?p=a),
      - (ii) which—
        - (I) is a publicly traded [partnership](/usc/26/761.md?p=a) (as defined in [section 7704(b)](/usc/26/7704.md?p=b)) to which [subsection (a)](/usc/26/7704.md?p=a) of section 7704 does not apply,
        - (II) is a withholding foreign [partnership](/usc/26/761.md?p=a) for purposes of chapters [3](/usc/26/chstA/ch3.md), [4](/usc/26/chstA/ch4.md), and [61](/usc/26/chstF/ch61.md), and
        - (III) if such foreign [partnership](/usc/26/761.md?p=a) were a domestic corporation, would be a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) holding corporation (determined without regard to [paragraph (1)](#k-1)) at any time during the 5-year period ending on the date of [disposition](/usc/26/424.md?p=c-1) of, or distribution with respect to, such [partnership](/usc/26/761.md?p=a)’s [interests](/usc/26/856.md?p=f-1) in a [real estate investment trust](/usc/26/856.md?p=a), or
      - (iii) which is designated as a qualified collective investment vehicle by the Secretary and is either—
        - (I) fiscally transparent within the meaning of [section 894](/usc/26/894.md), or
        - (II) required to include [dividends](/usc/26/316.md?p=a) in its gross income, but entitled to a deduction for distributions to persons holding [interests](/usc/26/856.md?p=f-1) (other than [interests](/usc/26/856.md?p=f-1) solely as a creditor) in such foreign person.
  - (4) **Partnership allocations—**
    - (A) **In general—** For 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](/usc/26/761.md?p=b) in a [partnership](/usc/26/761.md?p=a) that is a qualified shareholder, if such [partner](/usc/26/761.md?p=b)’s proportionate share of USRPI gain for the taxable year exceeds such [partner](/usc/26/761.md?p=b)’s distributive share of USRPI gain for the taxable year, then
      - (i) such [partner](/usc/26/761.md?p=b)’s distributive share of the amount of gain taken into account under [subsection (a)(1)](#a-1) by the [partner](/usc/26/761.md?p=b) for the taxable year (determined without regard to this paragraph) shall be increased by the amount of such excess, and
      - (ii) such [partner](/usc/26/761.md?p=b)’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)](#a-1) (determined without regard to this paragraph) shall be decreased (but not below zero) by the amount of such excess.
    - (B) **USRPI gain—** For the purposes of this paragraph, the term “USRPI gain” means the excess (if any) of—
      - (i) the sum of—
        - (I) any gain recognized from the [disposition](/usc/26/424.md?p=c-1) of a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interest](/usc/26/856.md?p=f-1), and
        - (II) any distribution by a [real estate investment trust](/usc/26/856.md?p=a) that is treated as gain recognized from the [sale or exchange](/usc/26/864.md?p=c-8-D) of a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interest](/usc/26/856.md?p=f-1), over
      - (ii) any loss recognized from the [disposition](/usc/26/424.md?p=c-1) of a [United States](/usc/26/993.md?p=g) real [property](/usc/26/317.md?p=a) [interest](/usc/26/856.md?p=f-1).
    - (C) **Proportionate share of USRPI gain—** 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](/usc/26/761.md?p=a) items of income or gain (excluding gain allocated under [section 704(c)](/usc/26/704.md?p=c)), whichever results in the largest proportionate share. If the investor’s share of [partnership](/usc/26/761.md?p=a) items of income or gain (excluding gain allocated under [section 704(c)](/usc/26/704.md?p=c)) may vary during the period such investor is a [partner](/usc/26/761.md?p=b) in the [partnership](/usc/26/761.md?p=a), such share shall be the highest share such investor may receive.
- (l) **Exception for qualified foreign pension funds—**
  - (1) **In general—** For purposes of this section, a qualified foreign pension [fund](/usc/26/851.md?p=g-2) shall not be treated as a nonresident alien individual or a foreign corporation. For purposes of the preceding sentence, an entity all the [interests](/usc/26/856.md?p=f-1) of which are held by a qualified foreign pension [fund](/usc/26/851.md?p=g-2) shall be treated as such a [fund](/usc/26/851.md?p=g-2).
  - (2) **Qualified foreign pension fund—** For purposes of this subsection, the term “qualified foreign pension [fund](/usc/26/851.md?p=g-2)” means any trust, corporation, or other [organization](/usc/26/414.md?p=m-6-A) or arrangement—
    - (A) which is created or organized under the law of a country other than the [United States](/usc/26/993.md?p=g),
    - (B) which is established—
      - (i) 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](/usc/26/430.md?p=c-7-D-vi) (including self-employed individuals) or persons designated by such [employees](/usc/26/430.md?p=c-7-D-vi), as a result of services rendered by such [employees](/usc/26/430.md?p=c-7-D-vi) to their employers, or
      - (ii) by one or more employers to provide retirement or pension benefits to participants or beneficiaries that are current or former [employees](/usc/26/430.md?p=c-7-D-vi) (including self-employed individuals) or persons designated by such [employees](/usc/26/430.md?p=c-7-D-vi) in consideration for services rendered by such [employees](/usc/26/430.md?p=c-7-D-vi) to such employers,
    - (C) which does not have a single participant or beneficiary with a right to more than five percent of its assets or income,
    - (D) 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
    - (E) with respect to which, under the laws of the country in which it is established or operates—
      - (i) contributions to such trust, corporation, [organization](/usc/26/414.md?p=m-6-A), 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
      - (ii) taxation of any investment income of such trust, corporation, [organization](/usc/26/414.md?p=m-6-A) 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.
  - (3) **Regulations—** The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection.

## Footnotes

[^1]: See References in Text note below.

## Source credit

(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; Pub. L. 117–169, title I, § 10101(a)(4)(B)(iii), Aug. 16, 2022, 136 Stat. 1822.)

## Notes

### Editorial Notes

### References in Text

Section 2 of the Investment Company Act of 1940, referred to in subsec. (h)(4)(E)(ii)(II), is classified to section 80a–2 of Title 15, Commerce and Trade.

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.

### Amendments

2022—Subsec. (a)(2)(A)(i). Pub. L. 117–169 substituted “55(b)(1)(D)” for “55(b)(2)”.

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 cl. (ii) shall be applied as if amendment 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) which 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” in introductory provisions.

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”.

Subsec. (k)(3)(B)(ii)(II). Pub. L. 115–141, § 101(p)(5)(A), inserted “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), with cl. (ii) to be applied as if amendment had never been enacted.

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”.

2010—Subsec. (h)(4)(A)(ii). Pub. L. 111–312 substituted “December 31, 2011” for “December 31, 2009”.

2008—Subsec. (h)(4)(A)(ii). Pub. L. 110–343 substituted “December 31, 2009” for “December 31, 2007”.

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).

2005—Subsec. (h)(1). Pub. L. 109–135 substituted “any distribution by a real estate investment trust with respect to any class of stock” for “any distribution by a REIT with respect to any class of stock” and “the 1-year period ending on the date of the distribution” for “the taxable year”.

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”.

1996—Subsec. (f). Pub. L. 104–188 struck out subsec. (f) which read as follows:

“(f) Distributions by Domestic Corporations 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) the adjusted basis of such property before the distribution, increased by

“(2) the sum of—

“(A) any gain recognized by the distributing corporation on the distribution, and

“(B) any tax paid under this chapter by the distributee on such distribution.”

1993—Subsec. (a)(2). Pub. L. 103–66 substituted “Minimum” for “21-percent minimum” in heading and “the taxable excess for purposes of section 55(b)(1)(A) shall not be less than” for “the amount determined under section 55(b)(1)(A) shall not be less than 21 percent of” in subpar. (A).

1990—Subsec. (k). Pub. L. 101–508 struck out subsec. (k) which read as follows: “If—

“(1) a foreign corporation adopts, or has adopted, a plan of liquidation described in section 334(b)(2)(A), and

“(2) the 12-month period described in section 334(b)(2)(B) for the acquisition by purchase of the stock of the foreign corporation, began after December 31, 1979, and before November 26, 1980,

then such foreign corporation 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.”

1988—Subsec. (l). Pub. L. 100–647 struck out subsec. (l) which provided special rule for certain United States shareholders of liquidating foreign corporations.

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—

“(i) the individual’s alternative minimum taxable income (as defined in section 55(b)) for the taxable year, or

“(ii) the individual’s net United States real 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.

1982—Subsec. (a)(2)(A). Pub. L. 97–248 substituted “section 55(a)(1) for the taxable year shall not be less than 20 percent of the lesser of—” for “section 55(a)(1)(A) for the taxable year shall not be less than 20 percent of whichever of the following is the least:” in introductory provisions, in cl. (i) struck out “(1)” after “section 55(b)” and inserted “or” at the end, in cl. (ii) substituted a period for a comma and struck out “or” at the end, and struck out former cl. (iii), which had provided for the amount of $60,000 as a third alternative.

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).

### Statutory Notes and Related Subsidiaries

### Effective Date of 2022 Amendment

Amendment by Pub. L. 117–169 applicable to taxable years beginning after Dec. 31, 2022, see section 10101(f) of Pub. L. 117–169, set out as a note under section 11 of this title.

### Effective Date of 2018 Amendment

Amendment by section 101(p)(1)–(6), (q) of Pub. L. 115–141 effective as if included in the provision of the Protecting Americans from Tax Hikes Act of 2015, div. Q of Pub. L. 114–113, to which such amendment relates, see section 101(s) of Pub. L. 115–141, set out as a note under section 24 of this title.

### Effective Date of 2017 Amendment

Amendment by Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 12001(c) of Pub. L. 115–97, set out as a note under section 11 of this title.

### Effective Date of 2015 Amendment

Pub. L. 114–113, div. Q, title I, § 133(b), Dec. 18, 2015, 129 Stat. 3055, provided that: In general.—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]. 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 which would (but for the second sentence of paragraph (1)) have been required to withhold with respect to such distribution under section 1445 of such Code,such investment company shall not be liable to any person to whom such distribution was made for any amount so withheld and paid over to the Secretary of the Treasury.”

Amendment by section 322(a)(1), (2)(A) of Pub. L. 114–113 effective Dec. 18, 2015, and applicable to any disposition on and after Dec. 18, 2015, and any distribution by a real estate investment trust on or after such date which is treated as a deduction for a taxable year of such trust ending after such date, see section 322(c)(1) of Pub. L. 114–113, set out as a note under section 857 of this title.

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: Determination of domestic 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].”

### Effective Date of 2014 Amendment

Pub. L. 113–295, div. A, title I, § 133(b), Dec. 19, 2014, 128 Stat. 4018, provided that: In general.—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]. Amounts withheld on or before date of enactment.—In the case of a regulated investment company— which makes a distribution after December 31, 2013, and before the date of the enactment of this Act, and which would (but for the second sentence of paragraph (1)) have been required to withhold with respect to such distribution under section 1445 of such Code,such investment company shall not be liable to any person to whom such distribution was made for any amount so withheld and paid over to the Secretary of the Treasury.”

### Effective Date of 2013 Amendment

Pub. L. 112–240, title III, § 321(b), Jan. 2, 2013, 126 Stat. 2332, provided that: In general.—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]. Amounts withheld on or before date of enactment.—In the case of a regulated investment company— which makes a distribution after December 31, 2011, and before the date of the enactment of this Act; and which would (but for the second sentence of paragraph (1)) have been required to withhold with respect to such distribution under section 1445 of such Code,such investment company shall not be liable to any person to whom such distribution was made for any amount so withheld and paid over to the Secretary of the Treasury.”

### Effective Date of 2010 Amendment

Pub. L. 111–312, title VII, § 749(b), Dec. 17, 2010, 124 Stat. 3320, provided that: In general.—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]. Amounts withheld on or before date of enactment.—In the case of a regulated investment company— which makes a distribution after December 31, 2009, and before the date of the enactment of this Act [Dec. 17, 2010]; and which would (but for the second sentence of paragraph (1)) have been required to withhold with respect to such distribution under section 1445 of such Code,such investment company shall not be liable to any person to whom such distribution was made for any amount so withheld and paid over to the Secretary of the Treasury.”

### Effective Date of 2008 Amendment

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: In general.—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. Amounts withheld on or before date of enactment.—In the case of a regulated investment company— which makes a distribution after December 31, 2007, and before October 4, 2008, and which would (but for the second sentence of paragraph (1)) have been required to withhold with respect to such distribution under section 1445 of such Code,such investment company shall not be liable to any person to whom such distribution was made for any amount so withheld and paid over to the Secretary of the Treasury.”

### Effective Date of 2006 Amendment

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.”

Amendment by section 505(a) of Pub. L. 109–222 applicable to taxable years of qualified investment entities beginning after Dec. 31, 2005, except that no amount shall be required to be withheld under section 1441, 1442, or 1445 of the Internal Revenue Code of 1986 with respect to any distribution before May 17, 2006 if such amount was not otherwise required to be withheld under any such section as in effect before such amendments, see section 505(d) of Pub. L. 109–222, set out as a note under section 852 of this title.

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].”

### Effective Date of 2005 Amendment

Amendment by Pub. L. 109–135 effective as if included in the provision of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which such amendment relates, see section 403(nn) of Pub. L. 109–135, set out as a note under section 26 of this title.

### Effective Date of 2004 Amendment

Amendment by section 411(c)(1) of Pub. L. 108–357 applicable to dividends with respect to taxable years of regulated investment companies beginning after Dec. 31, 2004, and amendment by section 411(c)(2)–(5) of Pub. L. 108–357 effective after Dec. 31, 2004, see section 411(d)(1), (3) of Pub. L. 108–357, set out as a note under section 871 of this title.

Amendment by section 418(a) of Pub. L. 108–357 applicable to any distribution by a real estate investment trust which is either treated as a deduction for a taxable year of such trust beginning after Oct. 22, 2004, or made after Oct. 22, 2004, and treated as a deduction under section 860 of this title for a taxable year of such trust beginning on or before Oct. 22, 2004, see section 418(c) of Pub. L. 108–357, as amended, set out as a note under section 857 of this title.

### Effective Date of 1996 Amendment

Amendment by Pub. L. 104–188 effective, except as otherwise expressly provided, as if included in the provision of the Revenue Reconciliation Act of 1990, Pub. L. 101–508, title XI, to which such amendment relates, see section 1702(i) of Pub. L. 104–188, set out as a note under section 38 of this title.

### Effective Date of 1993 Amendment

Amendment by Pub. L. 103–66 applicable to taxable years beginning after Dec. 31, 1992, see section 13203(d) of Pub. L. 103–66, set out as a note under section 55 of this title.

### Effective Date of 1988 Amendment

Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.

### Effective Date of 1986 Amendment

Amendment by section 631(e)(12) of Pub. L. 99–514 applicable to any distribution in complete liquidation, and any sale or exchange, made by a corporation after July 31, 1986, unless such corporation is completely liquidated before Jan. 1, 1987, any transaction described in section 338 of this title for which the acquisition date occurs after Dec. 31, 1986, and any distribution, not in complete liquidation, made after Dec. 31, 1986, with exceptions and special and transitional rules, see section 633 of Pub. L. 99–514, set out as an Effective Date note under section 336 of this title.

Amendment by section 701(e)(4)(G) of Pub. L. 99–514 applicable to taxable years beginning after Dec. 31, 1986, with certain exceptions and qualifications, see section 701(f) of Pub. L. 99–514, set out as an Effective Date note under section 55 of this title.

Amendment by section 1810(f)(1) of Pub. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99–514, set out as a note under section 48 of this title.

### Effective Date of 1982 Amendment

Amendment by Pub. L. 97–248 applicable to taxable years beginning after Dec. 31, 1982, see section 201(e)(1) of Pub. L. 97–248, set out as a note under section 5 of this title.

### Effective Date of 1981 Amendment

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.”

### Effective Date

Pub. L. 96–499, title XI, § 1125(a), (b), Dec. 5, 1980, 94 Stat. 2690, provided that:In general.—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.Reporting.—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.”

### Repeal

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) [formerly set out in 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.”

### Savings Provision

For provisions that nothing in amendment by Pub. L. 101–508 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Nov. 5, 1990, for purposes of determining liability for tax for periods ending after Nov. 5, 1990, see section 11821(b) of Pub. L. 101–508, set out as a note under section 45K of this title.

### Applicability of Certain Amendments by Pub. L. 99–514 in Relation to Treaty Obligations of United States

For applicability of amendment by section 701(e)(4)(G) of Pub. L. 99–514 notwithstanding any treaty obligation of the United States in effect on Oct. 22, 1986, with provision that for such purposes any amendment by title I of Pub. L. 100–647 be treated as if it had been included in the provision of Pub. L. 99–514 to which such amendment relates, see section 1012(aa)(2), (4) of Pub. L. 100–647, set out as a note under section 861 of this title.

### Plan Amendments Not Required Until January 1, 1989

For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title.

### Special Rule for Applying Section 897

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: 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 States real 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].In the case of any underpayment attributable to a failure to meet any requirement of this subsection, the period during which such underpayment may be assessed shall in no event expire before the date 5 years after the date of the enactment of the Technical and Miscellaneous Revenue Act of 1988. 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. [Repealed. Pub. L. 100–647, title I, § 1012(m)(2), Nov. 10, 1988, 102 Stat. 3513.] Effective Date.—The provisions of this section shall take effect on the date of the enactment of this section [Oct. 22, 1986].”

### Gain From Disposition of Investment in United States Real Property by Nonresident Alien Individuals and Foreign Corporations

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:In general.—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.Special rule for treaties renegotiated before 1985.—If— 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,then paragraph (1) shall be applied with respect to obligations under the old treaty by substituting for ‘December 31, 1984’ the date (not later than 2 years after the new treaty was signed) specified in the new treaty (or accompanying exchange of notes).”

### Adjustment in Basis for Certain Transactions Between Related Persons

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 general.—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.Nontaxed gain.—For purposes of paragraph (1), the term ‘nontaxed gain’ means any gain which is not subject to tax under section 871(b)(1) or 882(a)(1) of such Code— because the disposition occurred before June 19, 1980, or because of any treaty obligation of the United States.”