- 52 -
HALPERN, J., dissenting:
I. Introduction
Section 163(h)(2)(A) exempts from the category of personal
interest (which is nondeductible for individuals): "interest
paid or accrued on indebtedness properly allocable to a trade or
business (other than the trade or business of performing services
as an employee)".
The majority finds that a reasonable interpretation of that
exemption includes the interest here in question. The majority
holds that, if the tracing rules of section 1.163-8T, Temporary
Income Tax Regs., require a contrary conclusion, then, to that
extent, the tracing rules are invalid. If the tracing rules of
section 1.163-8T, Temporary Income Tax Regs., 52 Fed. Reg. 24999
(July 2, 1987), do not require a contrary conclusion, but the
specific rule of section 1.163-9T(b)(2)(i)(A), Temporary Income
Tax Regs., 52 Fed. Reg. 48409 (Dec 22, 1987), does, then the
majority holds that that specific rule is invalid.
In so holding, the majority departs from the Supreme Court's
teachings in Chevron, U.S.A., Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837, 842-844 (1984), and NationsBank v.
Variable Annuity Life Ins. Co., 513 U.S. ___, 115 S. Ct. 810,
813-814 (1995). I believe that application of those decisions
leads to the conclusion that the temporary regulations at issue
are valid, which leads to a decision for respondent.
II. In the Absence of Regulations
I agree that, in the absence of temporary regulations, a
Page: Previous 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 NextLast modified: May 25, 2011