John L. Seymour - Page 18

                                        - 18 -                                        
          with section 1.163-8T, Temporary Income Tax Regs., 52 Fed. Reg.             
          24999 (July 2, 1987).  According to the property settlement                 
          agreement and financial statements provided by petitioner, he               
          received assets including certain household furnishings, Mrs.               
          Seymour's interest in two automobiles, and her interest in a                
          tax refund for 1985.  Petitioner's proposed allocation does not             
          allocate indebtedness to any of these assets.  Second, we find              
          petitioner's allocation of part of the indebtedness to the                  
          Denver, Colorado, rental real estate inappropriate.  The                    
          financial statements petitioner submitted, as well as                       
          petitioner's own testimony, indicate that Mrs. Seymour had no               
          interest in this asset prior to their divorce.  In addition,                
          the property settlement agreement does not provide for, or even             
          refer to, any property located in Denver, Colorado.                         
          Consequently, no amount of indebtedness or interest should be               
          allocated to this asset under section 1.163-8T(c)(3)(ii),                   
          Temporary Income Tax Regs., 52 Fed. Reg. 25001 (July 2, 1987).              
          Finally, petitioner's suggested allocation disregards the                   
          provisions of section 163(h)(3) and the guidance provided by                
          Notice 88-74, 1988-2 C.B. 385, concerning the characterization              
          of qualified residence interest.  We determine that the proper              
          allocation of petitioner's indebtedness to his residence must               
          be made in accordance with this guidance.  The remaining                    
          indebtedness must be allocated among all other assets                       
          petitioner received incident to the property settlement                     




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  Next

Last modified: May 25, 2011