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F. Whether Petitioners May Deduct the Interest At Issue as
Qualified Residence Interest Under Section 163(h)(2)(D)
Petitioners contend that they may deduct the interest at
issue as qualified residence interest under section 163(h)(2)(D)
and (3)(A)(ii). Respondent contends that the interest paid on
the notes to Voier was not qualified residence interest.
Respondent also contends that petitioners did not prove the
amount of qualified residence interest attributable to the Key
Bank loan.
Qualified residence interest is interest that is paid or
accrued on acquisition or home equity indebtedness with respect
to any qualified residence of the taxpayer. Sec. 163(h)(3)(A).
Acquisition indebtedness is indebtedness paid to acquire,
construct, or substantially improve a qualified residence and is
secured by that residence. Sec. 163(h)(3)(B)(i). Home equity
indebtedness is indebtedness other than acquisition indebtedness
that is secured by a qualified residence if the indebtedness is
not more than the fair market value of the qualified residence
reduced by the amount of acquisition indebtedness for the
qualified residence. Sec. 163(h)(3)(C)(i).
There is no evidence of the fair market value of the
residence that petitioners contend is the qualified residence, or
the amount of acquisition indebtedness. There are no facts in
the record upon which we may estimate the fair market value or
acquisition indebtedness. In the opening brief, respondent
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