- 58 -
813-814. Indeed, in developing the tracing method of interest
allocation in the temporary regulations, the Secretary seriously
considered an alternative of requiring an allocation method based
on pro rata apportionment of interest expense among a taxpayer's
assets. T.D. 8145, 1987-2 C.B. 47, 50. The Secretary rejected
that approach, at least for the present, because of "the
practical and theoretical problems that a comprehensive pro rata
apportionment system would present". Id. No doubt, those
problems included the allocation of deficiency interest among
personal and business assets. Clearly, the problem facing the
Secretary in determining how properly to allocate interest is
very much larger than the narrow question addressed by the
majority. Moreover, nothing in the majority's opinion suggests
that, on an overall basis, the tracing method of allocation
adopted by the Secretary is other than an acceptable choice among
permissible interpretations of the statute: "The choice among
reasonable interpretations is for the Commissioner, not the
courts." National Muffler Dealers Association Inc. v. United
States, 440 U.S. 472, 488 (1979). The majority’s quarrel is not
with the Secretary’s choice of a method of allocation, which goes
only so far as to allocate deficiency interest to a borrowing to
pay taxes. The majority’s quarrel is with the further
conclusion, expressed in section 1.163-9T(b)(2)(i)(A), Temporary
Income Tax Regs., that income taxes on business income are not an
expenditure made in connection with a trade or business. Section
1.163-8T, Temporary Income Tax Regs. is valid.
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