TIMBER REIT MODERNIZATION.

SEC. 15312. TIMBER REIT MODERNIZATION.(a) In General.—Section 856(c)(5) is amended by adding after subparagraph (G) the following new subparagraph:“(H) Treatment of timber gains.—“(i) In general.—Gain from the sale of real property described in paragraph (2)(D) and (3)(C) shall include gain which is—“(I) recognized by an election under section 631(a) from timber owned by the real estate investment trust, the cutting of which is provided by a taxable REIT subsidiary of the real estate investment trust;“(II) recognized under section 631(b); or“(III) income which would constitute gain under subclause (I) or (II) but for the failure to meet the 1-year holding period requirement.“(ii) Special rules.—“(I) For purposes of this subtitle, cut timber, the gain from which is recognized by a real estate investment trust pursuant to an election under section 631(a) described in clause (i)(I) or so much of clause (i)(III) as relates to clause (i)(I), shall be deemed to be sold to the taxable REIT subsidiary of the real estate investment trust on the first day of the taxable year.“(II) For purposes of this subtitle, income described in this subparagraph shall not be treated as gain from the sale of property described in section 1221(a)(1).“(iii) Termination.—This subparagraph shall not apply to dispositions after the termination date.”.(b) Termination Date.—Subsection (c) of section 856 is amended by adding at the end the following new paragraph:122 STAT. 2266 “(8) Termination date.—For purposes of this subsection, the term ‘termination date’ means, with respect to any taxpayer, the last day of the taxpayer’s first taxable year beginning after the date of the enactment of this paragraph and before the date that is 1 year after such date of enactment.”.(c) Effective Date.—The amendments made by subsection (a) shall apply to dispositions in taxable years beginning after the date of the enactment of this Act.