John A. Malone and Brenda K. Malone - Page 19

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          deduction that is no less than the amount that would be allowed             
          under personal interest phase-in rules for each year.                       
          E.   Whether Petitioners May Deduct the Interest At Issue as An             
               Expense for the Production of Income Under Section 212                 
               Petitioners contend that they may deduct the interest at               
          issue as an expense for the production of income under section              
          212.  We disagree.                                                          
               Petitioners asserted without explanation in their pretrial             
          memorandum and posttrial briefs that they may deduct the interest           
          at issue under section 212.  Petitioners have not cited (and we             
          are not aware of) any case in which a court disallowed interest             
          deductions under section 163 and allowed them under section 212.            
               Petitioner testified that petitioners bought Seattle Pump              
          stock so that he and his family could have jobs.  Section 1.212-            
          1(f), Income Tax Regs., provides that taxpayers may not deduct              
          under section 212 the costs of seeking employment or placing                
          oneself in a position to begin rendering personal services for              
          compensation.  The limits of section 163(d) would be undermined             
          if taxpayers could deduct under section 212 interest which is not           
          deductible under section 163(d).                                            
               We conclude that petitioners may not deduct any of the                 
          interest at issue under section 212.                                        









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