TITLE-HOLDING COMPANIES PERMITTED TO RECEIVE SMALL AMOUNTS OF UNRELATED BUSINESS TAXABLE INCOME.

SEC. 13146. TITLE-HOLDING COMPANIES PERMITTED TO RECEIVE SMALL AMOUNTS OF UNRELATED BUSINESS TAXABLE INCOME. (a) General Rule.— Paragraph (25) of section 501(c) is amended by adding at the end thereof the following new subparagraph: “(G) (i) An organization shall not be treated as failing to be described m this paragraph merely by reason of the receipt of any otherwise disqualifying income which is incidentally derived from the holding of real property. “(ii) Clause (i) shall not apply if the amount of gross income described in such clause exceeds 10 percent of the organization’s gross income for the taxable year unless the organization establishes to the satisfaction of the Secretary that the receipt of gross income described in clause (i) in excess of such limitation was inadvertent and reasonable steps are being taken to correct the circumstances giving rise to such income.” (b) Conforming Amendment.— Paragraph (2) of section 501(c) is amended by adding at the end thereof the following new sentence: “Rules similar to the rules of subparagraph (G) of paragraph (25) shall apply for purposes of this paragraph.” (c) Effective Date.— The amendments made by this section shall apply to taxable years beginning on or after January 1, 1994.