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9TILE 26-INTERNAL REVENUE CODE substantially related (aside from the need of such organization for income or funds or the use it makes of the rents derived) to the exer- cise or performance by such organization of its charitable, educational, or other purpose or function constituting the basis for its ex- emption under section 501. (2) Special rule for related uses For purposes of applying paragraphs (1) (A), (C), and (D), the use of any property by an exempt organization which is related to an organization shall be treated as use by such organization. (3) Special rules when land is acquired for exempt use within 10 years (A) Neighborhood land If an organization acquires real property for the principal purpose of using the land (commencing within 10 years of the time of acquisition) in the manner described in paragraph (1)(A) and at the time of acquisi- tion the property is in the neighborhood of other property owned by the organization which is used in such manner, the real property acquired for such future use shall not be treated as debt-financed property so long as the organization does not abandon its intent to so use the land within the 10- year period. The preceding sentence shall not apply for any period after the expira- tion of the 10-year period, and shall apply after the first 5 years of the 10-year period only if the organization establishes to the satisfaction of the Secretary that it is rea- sonably certain that the land will be used in the described manner before the expiration of the 10-year period. (B) Other cases If the first sentence of subparagraph (A) is inapplicable only because- (i) the acquired land is not in the neigh- borhood referred to in subparagraph (A), or (ii) the organization (for the period after the first 5 years of the 10-year period) is unable to establish to the satis- faction of the Secretary that it Is reason- ably certain that the land will be used in the manner described inparagraph (1)(A) before the expiration of the 10-year period, but the land is converted to such use by the organization within the 10-year period, the real property (subject to the provisions of subparagraph (D)) shall not be treated as debt-financed property for any period before such conversion. For purposes of this subparagraph, land shall not be treated as used in the manner described in paragraph (1)(A) by reason of the use made of any structure which was on the land when ac- quired by the organization. (C) Limitations Subparagraphs (A) and (B)- (I) shall apply with respect to any struc- ture on the land when acquired by the or- ganization, or to the land occupied by the structure, only if (and so long as) the in- tended future use of the land in the manner described in paragraph (1)(A) re- quires that the structure be demolished or removed in order to use the land in such manner; (ii) shall not apply to structures erected on the land after the acquisition of the land; and (iit) shall not apply to property subject to a lease which is a business lease (as de- fined in this section immediately before the enactment of the Tax Reform Act of 1976). (D) Refund of taxes when subparagraph (B) ap- plies If an organization for any taxable year has not used land in the manner to satisfy the actual use condition of subparagraph (B) before the time prescribed by law (in- cluding extensions thereof) for filing the return for such taxable year, the tax for such year shall be computed without regard to the application of subparagraph (B), but if and when such use condition is satisfied, the provisions of subparagraph (B) shall then be applied to such taxable year. If the actual use condition of subparagraph (B) is satisfied for any taxable year after such time for filing the return, and if credit or refund of any overpayment for the taxable year resulting from the satisfaction of such use condition is prevented at the close of the taxable year in which the use condition is satisfied, by the operation of any law or rule of law (other than chapter 74, relating to closing agreements and compromises), credit or refund of such overpayment may nevertheless be allowed or made if claim therefor is filed before the expiration of 1 year after the close of the taxable year in which the use condition is satisfied. (E) Special rule for churches In applying this paragraph to a church or convention or association of churches, in lieu of the 10-year period referred to in sub. paragraphs (A) and (B) a 15-year period shall be applied, and subparagraphs (A) and (B)(ii) shall apply whether or not the ac- quired land meets the neighborhood .test. (c) Acquisition indebtedness (1) General rule For purposes of this section, the term "ac- quisition indebtedness" means, with respect to any debt-financed property, the unpaid amount of- (A) the indebtedness incurred by the or- ganization in acquiring or improving such property; (B) the indebtedness incurred before the acquisition or improvement of such proper- ty if such indebtedness would not have been incurred but for such acquisition or im- provement; and (C) the indebtedness incurred after the acquisition or improvement of such proper- ty if such indebtedness would not have been incurred but for such acquisition or im- provement and the incurrence of such in- debtedness was reasonably foreseeable at the time of such acquisition or improve- ment. Page 397