Saffet and Ana Uslu - Page 7

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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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