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Interest Expense
Petitioner claimed a deduction for interest paid in the
amount of $989 on his Schedule C. In the statutory notice of
deficiency, respondent allowed the claimed deduction. Petitioner
now contends that he is entitled to a deduction for interest paid
in the total amount of $2,999.88.
Section 163(a) provides that there shall be allowed as a
deduction all interest paid or accrued within the taxable year on
indebtedness. Petitioner submitted a record from Southview Bank
which shows that he paid interest in the amount of $2,999.88
during 1992. Petitioner testified that the proceeds of Southview
Bank loan were used to operate his real estate business during
1992.
Based on the record, we find that the interest paid by
petitioner to Southview Bank during 1992 constitutes interest
paid on indebtedness which is properly allocable to petitioner's
trade as a real estate salesman. The interest therefore does not
constitute personal interest which would be disallowed by section
163(h)(1). See sec. 163(h)(2)(A). Accordingly, we hold that
petitioner is entitled to a Schedule C deduction for 1992 for
interest paid in the amount of $2,999.88.
5(...continued)
therefore instruct respondent to include the conceded amount in
his Rule 155 computation. Respondent's counsel could not provide
the Court with the exact amount of the deduction at trial because
petitioner did not notify respondent that the claimed office
expenses included the computer until shortly before trial.
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Last modified: May 25, 2011