PROHIBITED TRANSACTION SAFE HARBORS.

SEC. 313. PROHIBITED TRANSACTION SAFE HARBORS. (a) Alternative 3-Year Averaging Test for Percentage of Assets That Can Be Sold Annually.— (1) [26 U.S.C. 857] In general.—Clause (iii) of section 857(b)(6)(C) is amended by inserting before the semicolon at the end the following: “, or (IV) the trust satisfies the requirements of subclause (II) applied by substituting ‘20 percent’ for ‘10 percent’ and the 3-year average adjusted bases percentage for the taxable year (as defined in subparagraph (G)) does not exceed 10 percent, or (V) the trust satisfies the requirements of subclause (III) applied by substituting ‘20 percent’ for ‘10 percent’ and the 3-year average fair market value percentage for the taxable year (as defined in subparagraph (H)) does not exceed 10 percent”. (2) 3-year average adjusted bases and fair market value percentages.—Paragraph (6) of section 857(b) is amended by redesignating subparagraphs (G) and (H) as subparagraphs (I) and (J), respectively, and by inserting after subparagraph (F) the following new subparagraphs: “(G) 3-year average adjusted bases percentage.—The term ‘3-year average adjusted bases percentage’ means, with respect to any taxable year, the ratio (expressed as a percentage) of— “(i) the aggregate adjusted bases (as determined for purposes of computing earnings and profits) of property (other than sales of foreclosure property or sales to which section 1033 applies) sold during the 3 taxable year period ending with such taxable year, divided by “(ii) the sum of the aggregate adjusted bases (as so determined) of all of the assets of the trust as of the beginning of each of the 3 taxable years which are part of the period referred to in clause (i). “(H) 3-year average fair market value percentage.—The term ‘3-year average fair market value percentage’ means, with respect to any taxable year, the ratio (expressed as a percentage) of— “(i) the fair market value of property (other than sales of foreclosure property or sales to which section 1033 applies) sold during the 3 taxable year period ending with such taxable year, divided by “(ii) the sum of the fair market value of all of the assets of the trust as of the beginning of each of the 3 taxable years which are part of the period referred to in clause (i).” . (3) [26 U.S.C. 857] Conforming amendments.—Clause (iv) of section 857(b)(6)(D) is amended by adding “or” at the end of subclause (III) and by adding at the end the following new subclauses: “(IV) the trust satisfies the requirements of subclause (II) applied by substituting ‘20 percent’ for ‘10 percent’ and the 3-year average adjusted bases percentage for the taxable year (as defined in subparagraph (G)) does not exceed 10 percent, or “(V) the trust satisfies the requirements of subclause (III) applied by substituting ‘20 percent’ for ‘10 percent’ and the 3-year average fair market value percentage for the taxable year (as defined in subparagraph (H)) does not exceed 10 percent,” . (b) Application of Safe Harbors Independent of Determination Whether Real Estate Asset Is Inventory Property.— (1) In general.—Subparagraphs (C) and (D) of section 857(b)(6) are each amended by striking “and which is described in section 1221(a)(1)” in the matter preceding clause (i). (2) No inference from safe harbors.—Subparagraph (F) of section 857(b)(6) is amended to read as follows: “(F) No inference with respect to treatment as inventory property.—The determination of whether property is described in section 1221(a)(1) shall be made without regard to this paragraph.” . (c) [26 U.S.C. 857 note] Effective Dates.— (1) In general.—The amendments made by subsection (a) shall apply to taxable years beginning after the date of the enactment of this Act. (2) Application of safe harbors.— (A) In general.—Except as provided in subparagraph (B), the amendments made by subsection (b) shall take effect as if included in section 3051 of the Housing Assistance Tax Act of 2008. (B) Retroactive application of no inference not applicable to certain timber property previously treated as not inventory property.—The amendment made by subsection (b)(2) shall not apply to any sale of property to which section 857(b)(6)(G) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of this Act) applies.