Chapter 7
Change in Use of Property

This chapter explains the treatment of unrelated debt-financed income by tax-exempt organizations.

All tax-exempt organizations subject to the tax on unrelated business income must include, with this income, unrelated debt-financed income from debt-financed property (defined in chapter 5).The income included is proportionate to the debt on the property. Various types of investment income are included, but only if the income arises from property acquired or improved with borrowed funds and if the production of income is unrelated to the purpose constituting the basis of the organization's tax exemption.

• Computation of Debt-Financed Income
• Gain From Sale or Other Disposition of Property
• Average Acquisition Indebtedness
• Average Adjusted Basis
• Computation of Debt/Basis Percentage
• Indeterminate Price
• Deductions
• Allocation Rules

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