- 54 -
Because a reasonable case can be made for the proposition that
all deficiency interest is personal interest, the temporary
regulations are valid, and we must sustain them. See Chevron,
U.S.A., Inc. v. Natural Resources Defense Council, Inc., supra;
NationsBank v. Variable Annuity Life Ins. Co., supra.
III. Section 1.163-8T and 9T, Temporary Income Tax Regs.,
Is Valid
A. Standard of Review
The majority sets forth the proper standard for reviewing a
regulation. Majority op. pp. 12-13. The majority, I submit,
misapplies that standard.
The narrow question before us is whether section 1.163-
9T(b)(2)(i)(A), Temporary Income Tax Regs., is valid, insofar as
it applies to the facts of the instant case. Therefore, in order
to properly decide that issue, we must, in accordance with the
teaching of NationsBank v. Variable Annuity Life Ins. Co., supra,
answer two questions. First, is section 163(h) silent or
ambiguous with respect to either: (a) The standard for
determining which items of indebtedness are "properly allocable"
to a trade or business, or (b) "the specific issue at hand",
which is whether interest paid with respect to an individual's
Federal income tax liability is deductible? NationsBank v.
Variable Annuity Life Ins. Co., 513 U.S. at __, 115 S. Ct. at
813-814. Second, is section 1.163-9T(b)(2)(i)(A), Temporary
Income Tax Regs., a permissible interpretation of section 163(h)
in that it "fills a gap or defines a term in a way that is
reasonable in light of the legislature's revealed design"?
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