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business of Carrier Communications so as to satisfy the "properly
allocable to a trade or business" exception of section
163(h)(2)(A), without regard to the regulations.
Initially, we note that respondent does not question
petitioners' calculation of the amounts of the total interest
payments that are allocable to those portions of the income tax
deficiencies based on adjustments to the income from Carrier
Communications. Moreover, respondent has stipulated that those
adjustments reflected the correction of errors made in converting
the revenue of Carrier Communications giving rise to such income
from the accrual to the cash basis, i.e., the timing of reporting
such income. In this context, petitioners have satisfied some of
the conditions that have thus far enabled us to avoid a decision
as to the impact of section 163(h)(2)(A) and the temporary
regulation thereunder. Tippin v. Commissioner, 104 T.C. 518, 529
(1995) (taxpayer failed to show any relationship between the
interest expense and any business); Crouch v. Commissioner, T.C.
Memo. 1995-289 (record failed to support taxpayer's allocation);
Rose v. Commissioner, T.C. Memo. 1995-75 (investment interest).2
The question remains, however, whether the elements giving rise
In Tippin v. Commissioner, 104 T.C. 518, 529 n.9 (1995), we
specifically stated that we were not deciding the issue, a view
we also articulated in Rose v. Commissioner, T.C. Memo. 1995-75.
The issue was apparently also involved but not reached in True v.
United States, 93-2 USTC par. 50,461, 72 AFTR2d 93-5660 (D. Wyo.
1993), affd. per curiam without published opinion 35 F.3d 574
(10th Cir. 1994), because the District Court, in holding for the
Government, ruled that the interest on Federal income tax
deficiencies was attributable to the business of partnerships or
subchapter S corporations of which the taxpayers were partners or
shareholders and not to their businesses as individuals.
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