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section 1.163-9T, Temporary Income Tax Regs., can, in any event,
be appropriately independently determined. Accordingly, we turn
our attention to that task.
Section 1.163-9T(b)(2)(I)(A), Temporary Income Tax Regs.,
provides:
(2) Interest relating to taxes--(I) In general.
Except as provided in paragraph (b)(2)(iii) of this
section, personal interest includes interest--
(A) Paid on underpayment of individual Federal,
State or local income taxes * * * regardless of the
source of the income generating the tax liability;
The only legislative history of section 163(h) which
directly addresses the issue involved herein is the conference
committee report which states:
Under the conference agreement, personal interest
is not deductible. Personal interest is any interest,
other than interest incurred or continued in connection
with the conduct of a trade or business (other than the
trade or business of performing services as a[n]
employee), investment interest, or interest taken into
account in computing the taxpayer's income or loss from
passive activities for the year. Personal interest
also generally includes interest on tax deficiencies.
[H. Conf. Rept. 99-841 at II-154 (1986), 1986-3 C.B.
(Vol. 4) 1, 154.]
The General Explanation of the Tax Reform Act of 1986,
elaborates on this statement by providing as follows:
Personal interest also includes interest on
underpayment of individual Federal, State or local
income taxes notwithstanding that all or a portion of
the income may have arisen in a trade or business,
because such taxes are not considered derived from the
conduct of a trade or business.60 * * *
_______
60 Personal interest does not include interest on
taxes, other than income taxes, that are incurred in
connection with a trade or business. (For the rule
that taxes on net income are not attributable to a
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