Publication 598 |
2001 Tax Year |
Change in Use of Property
Debt on property that is not debt-financed property (described
under Exceptions to Debt-Financed Property in chapter 5)
is
not acquisition indebtedness. However, if an organization converts
this property to a use that results in its treatment as debt-financed
property, the outstanding principal debt on the property is thereafter
treated as acquisition indebtedness.
Example.
Four years ago a university borrowed funds to acquire an apartment
building as housing for married students. Last year, the university
rented the apartment building to the public for nonexempt purposes.
The outstanding principal debt becomes acquisition indebtedness as of
the time the building was first rented to the public.
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