Page:United States Statutes at Large Volume 83.djvu/574

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PUBLIC LAW 91-172-DEC. 30, 1969

[83 STAT.

and the incurrence of such indebtedness was reasonably foreseeable at the time of such acquisition or improvement, except that in the case of any taxable year beginning before January 1, 1972, any indebtedness incurred before June 28, 1966, shall not be taken into account. I n the case of an organization (other than a church or convention or association of churches) such indebtedness incurred before June 28, 1966, shall be taken into account if such indebtedness constitutes business lease indebtedness (as defined in subsection (g)). "(2) PROPERTY ACQUIRED SUBJECT TO MORTGAGE, ETC.—For purposes of this subsection— " (A) GENERAL RULE.—Where property (no matter how acquired) is acquired subject to a mortgage or other similar lien, the amount of the indebtedness secured by such mortgage or lien shall be considered as an indebtedness of the organization incurred in acquiring such property even though the organization did not assume or agree to pay such indebtedness. " (B) EXCEPTIONS.—Where property subject to a mortgage is acquired by an organization by bequest or devise, the indebtedness secured by the mortgage shall not be treated as acquisition indebtedness during a period of 10 years following the date of the acquisition. If an organization acquires property by gift subject to a mortgage which was placed on the property more than 5 years before the gift, which property was held by the donor more than 5 years before the gift, the indebtedness secured by such mortgage shall not be treated as acquisition indebtedness during a period of 10 years following the date of such gift. This subparagraph shall not apply if the organization, in order to acquire the equity in the property by bequest, devise, or gift, assumes and agrees to pay the indebtedness secured by the mortgage, or if the organization makes any payment for the equity in the property owned by the decedent or the donor. "(3) Exi-ENSioN OF OBLIGATIONS.—For purposes of this section, an extension, renewal, or refinancing of an obligation evidencing a pre-existing indebtedness shall not be treated as the creation of a new indebtedness. " (4)

80 Stat. 4. 26 USC 501.

INDEBTEDNESS INCURRED IN PERFORMING EXEMPT PURPOSE.—

For purposes of this section, the term 'acquisition indebtedness* does not include indebtedness the incurrence of which is inherent in the performance or exercise of the purpose or function constituting the basis of the organization's exemption, such as the indebtedness incurred by a credit union described in section 501(c) (14) in accepting deposits from its members. " (5) ANNUITIES.—For purposes of this section, the term 'acquisition indebtedness' does not include an obligation to pay an annuity which— ' ' (A) is the sole consideration (other than a mortgage to which paragraph (2)(B) applies) issued in exchange for property if, at the time of the exchange, the value of the annuity is less than 90 percent of the value of the property received in the exchange, " (B) is payable over the life of one individual in being at the time the annuity is issued, or over the lives of two individuals in being at such time, and " (C) is payable under a contract which— " (i) does not guarantee a minimum amount of payments or specify a maximum amount of payments, and

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