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that petitioners have failed to establish that the 1982 plan loan
proceeds were invested throughout the period June 4, 1982,
through October 4, 1991.
Based on our examination of the entire record before us, we
find that the 1991 interest payment constitutes investment
interest within the meaning of section 163(d).
We now turn to respondent's alternative contention that in
the event the Court were to determine that the 1991 interest
payment constitutes investment interest, which we have, either
section 72(e) or section 72(p)(3) bars petitioners from taking a
deduction for that interest. The following explanation was set
forth in the notice for respondent's determination to disallow
certain investment interest expenses claimed by petitioners in
their returns for the years at issue: "It is determined that your
deduction for investment interest expenses is limited to your net
investment income."
The Court ordered seriatim briefs in this case, and respon-
dent raised for the first time in the answering brief to peti-
tioners' opening brief that section 72(e) precludes the interest
deductions at issue because the Hickman corporation profit-
sharing plan is a plan described in section 72(e)(7).4 We con
4 Sec. 72(e)(7) applies to any trust or contract
(i) which is described in clause (i) or subclause (I),
(II), or (III) of clause (ii) of paragraph (5)(D), and
(continued...)
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