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INTERNAL REVENUE CODE OF 1964 property whose relationship with a lessee of the same property is such that losses in respect of sales or exchanges of property between.the 2 lessees woidd be disallowed under section 267(a). (3) EXCEPTIONS. —
(A) No lease shall be considered a business lease if— (i) such lease is entered into primarily for purposes which are substantially related (aside from the need of such organization for income or funds or the use it makes of the rents derived) to the exercise or performance by such organization of its charitable, educational, or other purpose or function constituting the basis for its exemption under section 501, or (ii) the lease is of premises in a building primarily designed for occupancy, and occupied, by the organization. (B) If a lease for more than 5 years to a tenant is for only a portion of the real property, and space in the real property is rented during the taxable year under a lease for not more than 5 years to any other tenant of the organization, leases of the real property for more than 5 years shall be considered as business leases during the taxable year only if— (i) the rents derived from the real property during the taxable year under leases for more than 5 years (not including, as a lease for more than 5 years, an occupancy which is considered as such a lease by reason of paragraph (2)(B)) represent 50 percent or more of the total rents derived during the taxable year from the real property; or the area of the premises occupied under leases for more than 5 years (not including, as a lease for more than 5 years, an occupancy which is considered as such a lease by reason of paragraph (2)(B)) represents, at any time during the taxable year, 50 percent or more of the total area of the real property rented at such time; or (ii) the rent derived from the real property during the taxable year from any tenant under a lease for more than 5 years (including as a lease for more than 5 years an occupancy which is considered as such a lease by reason of paragraph (2)(B)), or from a group of tenants (under such leases) who are either members of an affiliated group (as defined in section 1504) or partners, represents more than 10 percent of the total rents derived during the taxable year from such property; or the area of the premises occupied by any one such tenant, or by any such group of tenants, represents at any time during the taxable year more than 10 percent of the total area of the real property^ rented at such time. I n the application of clause (i), if during the last half of the term of a lease a new lease is made to take effect after the expiration of such lease, the unexpired portion of such lease on the date the second lease is made shall not be treated as a part of the term of the second lease, (c) B U S I N E S S L E A S E INDEBTEDNESS.— (1) GENERAL RULE.—The term "business
lease indebtedness" means, with respect to any real property leased for a term of more than 5 years, the unpaid amount of— § 514(b)(2)(B)
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