testing period
(4) Definitions and special rules (A) Qualified investment entity The term “qualified investment entity” means— (i) any real estate investment trust, and (ii) any regulated investment company which is a United States real property holding corporation or which would be a United States real property holding corporation if the exceptions provided in subsections (c)(3) and (h)(2) did not apply to interests in any real estate investment trust or regulated investment company. (B) Domestically controlled The term “domestically controlled qualified investment entity” means any qualified investment entity in which at all times during the testing period less than 50 percent in value of the stock was held directly or indirectly by foreign persons. (C) Foreign ownership percentage The term “foreign ownership percentage” means that percentage of the stock of the qualified investment entity which was held (directly or indirectly) by foreign persons at the time during the testing period during which the direct and indirect ownership of stock by foreign persons was greatest. (D) Testing period The term “testing period” means whichever of the following periods is the shortest: (i) the period beginning on June 19, 1980 , and ending on the date of the disposition or of the distribution, as the case may be, (ii) the 5-year period ending on the date of the disposition or of the distribution, as the case may be, or (iii) the period during which the qualified investment entity was in existence. (E) Special ownership rules For purposes of determining the holder of stock under subparagraphs (B) and (C)— (i) in the case of any class of stock of the qualified investment entity which is regularly traded on an established securities market in the United States, a person holding less than 5 percent of such class of stock at all times during the testing period shall be treated as a United States person unless the qualified investment entity has actual knowledge that such person is not a United States person, (ii) any stock in the qualified investment entity held by another qualified investment entity— (I) any class of stock of which is regularly traded on an established securities market, or (II) which is a regulated investment company which issues redeemable securities (within the meaning of section 2 of the Investment Company Act of 1940), shall be treated as held by a foreign person, except that if such other qualified investment entity is domestically controlled (determined after application of this subparagraph), such stock shall be treated as held by a United States person, and (iii) any stock in the qualified investment entity held by any other qualified investment entity not described in subclause (I) or (II) of clause (ii) shall only be treated as held by a United States person in proportion to the stock of such other qualified investment entity which is (or is treated under clause (ii) or (iii) as) held by a United States person.