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with respect to any qualified residence of the taxpayer". The
parties do not dispute that the Alisal property was petitioners'
qualified residence. The dispute is whether petitioners'
payments constituted interest on "acquisition indebtedness" with
respect to the Alisal property.
The "acquisition indebtedness" in section 163(h)(3)(A)(i)
must, in general, be an obligation of the taxpayer and not an
obligation of another. See Golder v. Commissioner, 604 F.2d 34,
35 (9th Cir. 1979), affg. T.C. Memo. 1976-150; Smith v.
Commissioner, 84 T.C. 889, 897 (1985), affd. without published
opinion 805 F.2d 1073 (D.C. Cir. 1986); Hynes v. Commissioner, 74
T.C. 1266, 1287 (1980). However, section 1.163-1(b), Income Tax
Regs., provides, in pertinent part:
Interest paid by the taxpayer on a mortgage upon real estate
of which he is the legal or equitable owner, even though the
taxpayer is not directly liable upon the bond or note
secured by such mortgage, may be deducted as interest on his
indebtedness. * * *
In Golder v. Commissioner, supra, the Court of Appeals for the
Ninth Circuit, to which an appeal in this case would generally
lie, indicated that section 1.163-1(b), Income Tax Regs., allows
the deduction of interest by the taxpayer, even though the
taxpayer is not personally liable for the mortgage as, for
example, where the mortgage is nonrecourse, or where the taxpayer
purchases property subject to a mortgage. In such situations,
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