- 5 -
Petitioners, however, contend that section 1.163-
9T(b)(2)(i)(A), Temporary Income Tax Regs., supra, is invalid
because it is not a reasonable interpretation of the legislative
definition of personal interest contained in section
163(h)(2)(A). In support of this contention, petitioners rely on
our recent decision in Redlark v. Commissioner, 106 T.C. 31
(1996), in which we held that under the facts presented in that
case, section 1.163-9T(b)(2)(i)(A), Temporary Income Tax Regs.,
supra, was invalid, and that the interest on the deficiency in
that case constituted an ordinary and necessary expense of a
trade or business and, accordingly, was deductible. Petitioners'
reliance on Redlark v. Commissioner, supra, is misplaced.
We noted in Redlark v. Commissioner, supra at 47, that there
are situations where deficiency interest will not constitute an
ordinary and necessary business expense allocable within the
meaning of section 163(h)(2)(A). Therefore, we begin our analy-
sis with whether the interest expense involved herein is an
ordinary and necessary expense sufficiently connected to the
business of petitioner so as to satisfy the "properly allocable
to a trade or business" exception of section 163(h)(2)(A).
The case herein is appealable to the Court of Appeals for
the Tenth Circuit, which, in Commissioner v. Polk, 276 F.2d 601
(10th Cir. 1960), affg. 31 T.C. 412 (1958), affirmed our decision
that interest on an income tax deficiency, arising out of inven-
tory valuation corrections, was a deductible business expense for
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