John L. Seymour - Page 1

                                   109 T.C. No. 14                                    

                               UNITED STATES TAX COURT                                

                           JOHN L. SEYMOUR, Petitioner v.                             
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 2575-96.                  Filed November 5, 1997.           

                    P deducted the amount of interest paid to his                     
               former spouse on an indebtedness which he incurred                     
               incident to their divorce.  P claimed that the                         
               indebtedness was properly allocable to investment,                     
               passive activity, and qualified residence indebtedness                 
               based on certain assets acquired pursuant to a decree                  
               of divorce.  R disallowed such deduction on the ground                 
               that sec. 1041, I.R.C., requires P's interest expense                  
               to be characterized as personal interest under sec.                    
               163(h)(1), I.R.C.                                                      
                    Held:  Sec. 1041, I.R.C., has no relevance to the                 
               proper characterization of interest on indebtedness                    
               incurred incident to divorce.                                          

               Thomas J. Thomas, for petitioner.                                      
               Leonard T. Provenzale, for respondent.                                 

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