- 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 thePage: 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