of a qualified converted building. (B) Certain expenditures not included The term qualified conversion expenditures does not include— (i) Straight line depreciation must be used Any expenditure with respect to which the taxpayer does not use the straight line method over a recovery period determined under subsection (c) or (g) of section 168. The preceding sentence shall not apply to any expenditure to the extent the alternative depreciation system of section 168(g) applies to such expenditure by reason of subparagraph (B) or (C) of section 168(g)(1). (ii) Cost of acquisition The cost of acquiring any building or interest therein. (iii) Enlargements Any expenditure attributable to the enlargement of an existing building. (iv) Tax-exempt use property Any expenditure in connection with the conversion of a building which is allocable to the portion of such property which is (or may reasonably be expected to be) tax-exempt use property (within the meaning of section 168(h)), except that— (I) 50 percent shall be substituted for 35 percent in paragraph (1)(B)(iii) thereof, and (II) an eligible educational institution (as defined in section 529(e)(5)) shall not be treated as a tax-exempt entity. This clause shall not apply for purposes of determining whether a building has been substantially converted. (v) Expenditures of lessee Any expenditure of a lessee of a building if, on the date the conversion is completed, the remaining term of the lease (determined without regard to any renewal periods) is less than the recovery period determined under section 168(c). (d) Progress expenditures (1) In general In the case of any building to which this subsection applies, except as provided in paragraph (3)— (A) if such building is self-converted property, any qualified conversion expenditure with respect to such building shall be taken into account for the taxable year for which such expenditure is properly chargeable to capital account with respect to such building, and (B) if such building is not self-converted property, any