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the Alisal property mortgage interest for the year 1992, nor did
they ever claim deductions on their tax returns for interest or
taxes attributable to this property.
The determinations of the Commissioner in a notice of
deficiency are presumed correct, and the burden is on the
taxpayer to prove that the determinations are in error. Rule
142(a); Welch v. Helvering, 290 U.S. 111 (1933). Moreover,
deductions are a matter of legislative grace, and the taxpayer
bears the burden of proving entitlement to any claimed deduction,
and that such deduction fits squarely within the ambit of the
statute providing the deduction. New Colonial Ice Co. v.
Helvering, 292 U.S. 435 (1934).
Section 163(a) provides that there shall be allowed as a
deduction all interest paid or accrued within the taxable year on
indebtedness. Section 163(h)(1), however, provides that, in the
case of a taxpayer other than a corporation, no deduction shall
be allowed for personal interest paid or accrued during the
taxable year. Section 163(h)(2) defines "personal interest" to
mean any interest allowable as a deduction other than, inter
alia, "any qualified residence interest". Sec. 163(h)(2)(D).
Thus, qualified residence interest is deductible under section
163(a). The term "qualified residence interest" is defined, in
pertinent part, in section 163(h)(3)(A)(i), as any interest paid
or accrued during the taxable year on "acquisition indebtedness
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