Real Estate Investment Trust Tax Simplification Act of 1997

TABLE OF CONTENTS:

Title I: Removal of Tax Traps for the Unwary

Title II: Conformity with Regulated Investment Company Rules

Title III: Other Simplification

Real Estate Investment Trust Tax Simplification Act of 1997 - Title I: Removal of Tax Traps for the Unwary - Amends the Internal Revenue Code to impose monetary penalties for the failure of a real estate investment trust (REIT) to comply with regulations regarding ascertaining the actual ownership of the outstanding shares, or certificates of beneficial interest, of the REIT. Requires treating a complying REIT as if it had met a requirement to not be closely held if it does not know, or exercising reasonable diligence would not have known, whether it was closely held.

(Sec. 102) Revises the definition of "rents from real property" with regard to impermissible tenant service income and constructive ownership of stock.

Title II: Conformity with Regulated Investment Company Rules - Provides for the treatment by shareholders of undistributed capital gains.

Title III: Other Simplification - Revises requirements concerning the treatment of earnings and profits with regard to certain distributions.

(Sec. 302) Modifies the grace period regarding foreclosure property. Allows one extension (currently, one or more extensions). Allows a REIT to revoke an election to treat property as foreclosure property. Changes requirements concerning termination of the grace period.

(Sec. 303) Sets forth special foreclosure rules for health care properties.

(Sec. 304) Revises: (1) the treatment of certain interest rate agreements; (2) the formula for determining the amount of excess noncash income; and (3) the circumstances in which a sale of property that is a real estate asset is not a prohibited transaction.

(Sec. 307) Provides for the circumstances in which sale of secured property by a REIT will be treated as if the REIT had held the property for at least four years.

(Sec. 308) Removes a requirement that, in order to be a qualified REIT subsidiary, the stock of a corporation must have been held by the REIT at all times the corporation was in existence.