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Rule 155 computation in accordance with the appropriate section
168(e) classification.
Interest
Petitioner claimed a deduction for interest paid in the
amount of $1,880. The interest claimed consists of: (1) One-
half of the interest paid during 1992 on petitioner's credit card
debt, and (2) interest paid during 1992 on a loan obtained by
petitioner to pay for studio recording time.
Section 163(a) provides that there shall be allowed as a
deduction all interest paid or accrued within the taxable year on
indebtedness. However, section 163(h)(1) generally disallows any
deduction for personal interest paid or accrued during the
taxable year. Although petitioner testified that she used her
credit cards for both business and personal expenses, we accept
her estimate that 50 percent of her credit card interest was paid
on debt incurred for business purposes, based upon her credible
testimony. Since the interest paid on the debt incurred to pay
for studio recording time is directly related to petitioner's
business, we hold that she is entitled to her claimed deduction
for interest expense.
Rental of Recording Studio
Petitioner claimed a deduction for rental of business
property in the amount of $2,169.33. The amount claimed includes
$1,200 paid as rent for the home office, discussed supra, and
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