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of a qualified residence between spouses incident to a divorce or
legal separation, the basis limitation on debt contained in
section 511(b) of the Tax Reform Act of 1986 may be increased by
the amount of secured indebtedness incurred by a spouse in
connection with the acquisition of the other spouse's interest in
the residence.8 Although enacted subsequent to the OBRA-87, the
8Sec. 1005(c)(14) of the Technical and Miscellaneous Revenue
Act of 1988, Pub. L. 100-647, 102 Stat. 3342, 3392, provides:
(A) For purposes of applying section 163(h) of the
1986 Code to any taxable year beginning during 1987,
if, incident to a divorce or legal separation--
(i) an individual acquires the interest
of a spouse or former spouse in a qualified
residence in a transfer to which section 1041
of the 1986 Code applies, and
(ii) such individual incurs indebtedness
which is secured by such qualified residence,
the amount determined under paragraph
(3)(B)(ii)(I) of section 163(h) of the 1986
Code (as in effect before the amendments made
by the Revenue Act of 1987) with respect to
such qualified residence shall be increased
by the amount determined under subparagraph
(B).
(B) The amount determined under this subparagraph
shall be equal to the excess (if any) of--
(i) the lesser of the amount of the
indebtedness described in subparagraph
(A)(ii), or the fair market value of the
spouse's or former spouse's interest in the
qualified residence as of the time of the
transfer, over
(ii) the basis of the spouse or former
spouse in such interest in such residence
(adjusted only by the cost of any
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