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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
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