- 4 -
Temporary Income Tax Regs., is invalid insofar as it disallows a
deduction for interest on a deficiency that is an ordinary and
necessary expense of a trade or business.
Section 62(a) provides in part:
(a) General Rule.--For purposes of this subtitle,
the term "adjusted gross income" means, in the case of
an individual, gross income minus the following
deductions:
(1) Trade and business deductions.--The
deductions allowed by this chapter (other than by
part VII of this subchapter) which are
attributable to a trade or business carried on by
the taxpayer, if such trade or business does not
consist of the performance of services by the
taxpayer as an employee.
Section 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 * * *
Section 163(h) provides in part:
(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),
Before proceeding to a determination of the effect of
pertinent regulations, we must first consider whether the
interest expense involved herein is sufficiently connected to the
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