- 6 - year." Section 163(d)(3) defines "investment interest" as "any interest allowable as a deduction under this chapter * * * which is paid * * * on indebtedness properly allocable to property held for investment." Section 163(d)(5) defines "property held for investment" as follows: (A) In general. The term "property held for investment" shall include-- (i) any property which produces income of a type described in section 469(e)(1), and (ii) any interest held by a taxpayer in an activity involving the conduct of a trade or business-- (I) which is not a passive activity, and (II) with respect to which the taxpayer does not materially participate. * * * * * * * (C) Terms.--For purposes of this paragraph, the terms "activity", "passive activity", and "materially participate" have the meanings given such terms by section 469. The income described in section 469(e)(1) includes "interest, dividends, annuities, or royalties not derived in the ordinary course of a trade or business", sometimes known as portfolio income. The dispute in this case revolves around whether the Russon Brothers stock is "property held for investment". Respondent has stipulated that petitioner materially participates in Russon Brothers, and concedes that section 163(d)(5)(A)(ii) does notPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011