To amend the Internal Revenue Code of 1986 to provide that interests in certain domestically controlled investment partnerships are not treated as United States real property interests.

Amends the Internal Revenue Code to provide that an interest in or owned by an investment partnership shall not be treated as a U.S. real property interest (and thus be subject to a higher rate of taxation upon the sale of such interest) if, during a specified testing period: (1) less than 50 percent in value of the capital or profits interests in such partnership is held directly or indirectly by foreign persons; (2) no single foreign person owns directly or indirectly more than ten percent of the capital or profits of such partnership; and (3) the adjusted basis of the partnership's U.S. real property interests does not exceed ten percent of the adjusted basis of its assets. Exempts dispositions of such interests of such partnerships from tax withholding requirements.