- 2 - a deed of trust on petitioners’ residence. Seattle Pump employed petitioner John A. Malone (petitioner) and other members of his family after petitioners bought the stock. Petitioners deducted interest they paid on the notes they used to buy the stock. Respondent disallowed the deduction on the grounds that the interest was personal interest under section 163(h). After concessions, we must decide: 1. Whether section 163(h), which was effective for taxable years beginning after December 31, 1986, applies to interest paid in 1989, 1990, and 1991 on indebtedness incurred in December 1986. We hold that it does. 2. Whether the interest at issue either is trade or business interest under section 163(h)(2)(A) or is investment interest under section 163(h)(2)(B) and (d). We hold that the interest is investment interest and that petitioners have not shown that they received any investment income. Sec. 163(d). 3. Whether petitioners may deduct the interest at issue as an expense for the production of income under section 212. We hold they may not. 4. Whether petitioners may deduct the interest at issue as qualified residence interest under section 163(h)(2)(D) and (3). We hold that they may not.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011