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Discussion
Petitioners assert that the interest expense is attributable
to petitioner's trade as a furniture lumper and therefore deduct-
ible as an ordinary and necessary expense of a trade or business
under section 162.4
Respondent argues that petitioners are not entitled to an
interest deduction under section 1.163-9T(b)(2)(i)(A), Temporary
Income Tax Regs., 52 Fed. Reg. 48409 (Dec. 22, 1987), which
treats interest incurred on a Federal individual income tax
deficiency as nondeductible personal interest under section
163(h).
Section 163(h) provides in part:
SEC. 163(h). Disallowance of Deduction for
Personal Interest.
(1) In general. In the case of a
taxpayer other than a corporation, no
deduction shall be allowed under this chapter
for personal interest paid or accrued during
the taxable year.
(2) Personal interest. For purposes of
this subsection, the term "personal interest"
means any interest allowable as a deduction
under this chapter other than--
(A) interest paid or accrued
on indebtedness properly allocable
to a trade or business (other than
the trade or business of performing
services as an employee) * * *
4Sec. 162(a) provides in part: "There shall be allowed as a
deduction all the ordinary and necessary expenses paid or
incurred during the taxable year in carrying on any trade or
business".
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Last modified: May 25, 2011