Citations Affected: IC 6-3-1-34.5.
Synopsis: Captive real estate investment trusts. Restricts the definition
of "captive real estate investment trust" in current law by excluding the
following entities from the 50% ownership condition: (1) A real estate
investment trust that is not itself a captive real estate investment trust.
(2) A qualified foreign entity. (3) An Australian property trust.
Effective: January 1, 2009 (retroactive).
January 16, 2009, read first time and referred to Committee on Rules and Legislative
A BILL FOR AN ACT to amend the Indiana Code concerning
association in which more than fifty percent (50%) of the entity's voting
power, beneficial interests, or shares are owned by a single entity
described in subsection (a)(3) that is owned or controlled, directly or
(1) a corporation, a trust, or an association that:
(A) is considered a real estate investment trust under Section 856 of the Internal Revenue Code; and
(B) is not a captive real estate investment trust (as defined in subsection (a));
(2) a person exempt from taxation under Section 501 of the Internal Revenue Code;
(3) a real estate investment trust that:
(A) is intended to become regularly traded on an established securities market; and
(B) satisfies the requirements of Section 856(a)(5) and Section 856(a)(6) of the Internal Revenue Code under Section 856(h) of the Internal Revenue Code;
(4) a qualified foreign entity; or
(5) a listed Australian property trust.
(c) For purposes of this section, the constructive ownership rules of Section 318 of the Internal Revenue Code, as modified by Section 856(d)(5) of the Internal Revenue Code, apply to the determination of the ownership of stock, assets, or net profits of any person.
(d) As used in this section, "qualified foreign entity" means a corporation, trust, association, or partnership that is organized outside the laws of the United States and satisfies the following criteria:
(1) At least seventy-five percent (75%) of the entity's total asset value at the close of its taxable year is represented by real estate assets (as defined by Section 856(c)(5)(B) of the Internal Revenue Code, including shares or certificates of a beneficial interest in any real estate investment trust), cash and cash equivalents, and United States government securities.
(2) The entity:
(A) is not subject to taxation on amounts distributed to its beneficial owners; or
(B) is exempt from entry level taxation.
(3) The entity annually distributes at least eighty-five percent (85%) of its taxable income (as computed in the jurisdiction in which it is organized) to the holders of its shares or certificates of a beneficial interest.
(4) Either of the following applies to the entity:
(A) Not more than ten percent (10%) of:
(i) the voting power; or
(ii) the value of the entity;
is held directly, indirectly, or constructively by a single entity or individual.
(B) The shares or beneficial interests of the entity are regularly traded on an established securities market.
(5) The entity is organized in a country that has a tax treaty with the United States.
(e) As used in this section, "Australian property trust" means either of the following:
(1) An Australian unit trust registered under the Australian Corporations Act in which the principal class of units is listed on a recognized stock exchange in Australia and is regularly traded on an established securities market.
(2) An entity organized as a trust in which a listed Australian property trust owns or controls, directly or indirectly, at least seventy-five percent (75%) of the voting power or value of the beneficial interests or shares in the trust.