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personal interest. Indeed, use of the word "generally" indicates
that allowing interest on a "tax deficiency" would be an
exception to the norm, such as provided for by section
163(h)(2)(E), and would not include the very common situation
where an "income tax deficiency" is based on adjustments to items
reported on an individual's Schedule C.
Second, the body of case law relied upon by the majority
found its genesis to a large extent in the failure of section
22(n) of the Internal Revenue Code of 1939 to directly address
whether an individual was entitled to deduct interest on an
income tax deficiency attributable to a trade or business and the
lack of legislative history and regulations on the subject. See
Commissioner v. Standing, 259 F.2d 450 (4th Cir. 1958), affg. 28
T.C. 789 (1957). However, in Tanner v. Commissioner, 45 T.C.
145, 150 (1965), affd. 363 F.2d 36 (4th Cir. 1966), where we held
that an individual taxpayer was not allowed to deduct State
individual income taxes as a business expense, we observed:
In reaching its conclusion [in Standing], the court
pointed out that neither the committee reports nor the
regulations with respect to section 22(n)(1)
specifically mentioned interest on tax deficiencies
with respect to business income or legal expenses
incurred in contesting such deficiencies. The same
cannot be said, of course, with respect to State income
taxes. As pointed out hereinabove, both the committee
reports and the regulations specifically state that
State income taxes, even though incurred as a result of
business profits, are not deductible in computing
adjusted gross income.
Like the situation presented to us in Tanner, both the
legislative history and contemporaneous regulations support a
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