- 45 -
holding that the interest paid on petitioners' late income tax
payment constitutes nondeductible "personal interest".
Third, the majority expresses concern that the regulation in
issue "discriminates against the individual who operates his or
her business as a proprietorship instead of in corporate form
where the limitations on the deduction of 'personal interest'
would not apply." See majority op. p. 15. The short answer to
this is that Congress, when it enacted section 163(h) disallowing
personal interest, excluded corporate taxpayers from its
provisions. Surely, the majority does not question Congress'
authority to allow corporations, which are treated as separate
taxable entities, to deduct items that individuals may not. But
if the majority is concerned about discrimination, it should
observe that the result it reaches produces an even greater
disparity of treatment between individual taxpayers. While the
majority would allow a business deduction for interest on income
tax deficiencies attributable to adjustments to proprietorship
income, interest on individual tax deficiencies attributable to
businesses operated as partnerships and subchapter S corporations
is not deductible as a business expense. Thus, even for taxable
years ending prior to the effective date of section 163(h), it
has been held that interest on an individual's income tax
deficiency attributable to adjustments to the income of a
partnership or an S corporation was not deductible as a business
expense by an individual partner or shareholder. True v. United
States, 35 F.3d 574 (10th Cir. 1994), affg. without published
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