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sufficient basis for validating, under all circumstances, the
specific provision of section 1.163-9T, Temporary Income Tax
Regs. Thus, section 1.163-8T(b)(5), Temporary Income Tax Regs.,
52 Fed. Reg. 25000 (July 2, 1987), defines personal expenditure
to mean "an expenditure that is not a business expenditure" and
section 1.163-8T(c)(3)(ii), Temporary Income Tax Regs., 52 Fed.
Reg. 25001 (July 2, 1987), provides:
(ii) Debt assumptions not involving cash
disbursements. If a taxpayer incurs or assumes a debt
in consideration for the sale or use of property, for
services, or for any other purpose, or takes property
subject to a debt, and no debt proceeds are disbursed
to the taxpayer, the debt is treated for purposes of
this section as if the taxpayer used an amount of the
debt proceeds equal to the balance of the debt
outstanding at such time to make an expenditure for
such property, services, or other purpose.
Under this provision, it would appear permissible to analyze
the elements of the income tax indebtedness to determine whether
its imputed expenditure is properly allocable to business
activity. Indeed, such an interpretation would be consistent
with the overall legislative purpose in enacting section 163(h),
namely to end the deduction for interest incurred to fund
consumption expenditures. S. Rept. 99-313 at 804 (1985), 1986-3
C.B. (Vol. 3) 804; H. Conf. Rept. 99-841 at II-154 (1986), 1986-3
C.B. (Vol. 4) 154. To conclude that an income tax deficiency is
ipso facto a consumption expenditure begs the issue. Thus, aside
from our conclusion that the regulatory provisions contained in
section 1.163-8T, Temporary Income Tax Regs., are unreasonable as
applied to the facts herein, it is possible to conclude that the
provisions are sufficiently elliptical so that the validity of
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