ASSOCIATIONS OF HOLDERS OF TIMESHARE INTERESTS TO BE TAXED LIKE OTHER HOMEOWNERS ASSOCIATIONS.

SEC. 966. ASSOCIATIONS OF HOLDERS OF TIMESHARE INTERESTS TO BE TAXED LIKE OTHER HOMEOWNERS ASSOCIATIONS. (a) Timeshare Associations Included as Homeowner Associations.— (1) In general.—Paragraph (1) of section 528(c) (defining homeowners association) is amended— (A) by striking “or a residential real estate management association” and inserting a residential real estate management association, or a timeshare association” in the material preceding subparagraph (A),111 STAT. 895 (B) by striking “or” at the end of clause (i) of subparagraph (B), by striking the period at the end of clause (ii) of subparagraph (B) and inserting “, or”, and by adding at the end of subparagraph (B) the following new clause: “(iii) owners of timeshare rights to use, or timeshare ownership interests in, association property in the case of a timeshare association,”, and (C) by inserting “and, in the case of a timeshare association, for activities provided to or on behalf of members of the association” before the comma at the end of subparagraph (C). (2) Timeshare association defined.—Subsection (c) of section 528 is amended by redesignating paragraph (4) as paragraph (5) and by inserting after paragraph (3) the following new paragraph: “(4) Timeshare association.—The term ‘timeshare association’ means any organization (other than a condominium management association) meeting the requirement of subparagraph (A) of paragraph (1) if any member thereof holds a timeshare right to use, or a timeshare ownership interest in, real property constituting association property.”. (b) Exempt Function Income.—Paragraph (3) of section 528(d) is amended by striking “or” at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting “, or”, and by adding at the end the following new subparagraph: “(C) owners of timeshare rights to use, or timeshare ownership interests in, real property in the case of a timeshare association.”. (c) Association Property.—Paragraph (5) of section 528(c), as redesignated by subsection (a)(2), is amended by adding at the end the following new flush sentence: “In the case of a timeshare association, such term includes property in which the timeshare association, or members of the association, have rights arising out of recorded easements, covenants, or other recorded instruments to use property related to the timeshare project.”. (d) Rate of Tax.—Subsection (b) of section 528 (relating to certain homeowners associations) is amended by inserting before the period “(32 percent of such income in the case of a timeshare association)”. (e) Effective Date.—The amendments made by this section shall apply to taxable years beginning after December 31, 1996.