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interest must be attributable to a trade or business to be
deductible, which we found to be the case in Polk v.
Commissioner, supra. Clearly, this statement does not support a
per se denial of the deduction of deficiency interest in view of
the fact that the Court of Appeals affirmed our decision that
such interest was an ordinary and necessary expense for net
operating loss purposes. It may be that the above-quoted
language narrows the types of situations where the ordinary and
necessary business expense requirement of section 162 has been
satisfied. Indeed, we are satisfied that, given the source of
the income tax adjustments herein, i.e., accounting errors in
applying cash and accrual methods, petitioners have satisfied any
such narrow standard. Reise v. Commissioner, supra (cash versus
accrual changes); cf. Polk v. Commissioner, supra (involving
inventory valuations). We reject respondent's attack to the
extent that it goes beyond the above quotation from Polk and is
directed against the pre-section 163(h) decided cases generally.
Concededly there is some confusion in the reasoning of the
decided cases, but the thrust of their bottomline conclusions is
clear. Exceptions will be accorded to the ordinary and necessary
provision of section 162 only when there is explicit legislative
indication that such a result was intended. Thus, we agree with
petitioners that there is a consistent body of pre-section 163(h)
case law holding that, at least under limited circumstances such
as were involved in Standing v. Commissioner, supra, Polk v.
Commissioner, supra, and Reise v. Commissioner, supra, deficiency
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