- 11 - to petitioner's case.5 Petitioner maintains that the settlement of his claim with DHHS was a decision made out of concern for his private medical practice, and thus payments made pursuant to the agreement are in pursuit of his trade or business. This is essentially the same argument he makes in support of deductibility under section 162. Similar to our section 162 analysis, interest on indebtedness must be allocated in the same manner as its underlying debt. Sec. 1.163-8T, Temporary Income Tax Regs., 52 Fed. Reg. 24999 (July 2, 1987). Underlying debt is allocated by tracing specific disbursements of the proceeds to specific expenditures. Sec. 1.163-8T, Temporary Income Tax Regs., 52 Fed. Reg. 24999 (July 2, 1987). If the underlying debt is incurred as a personal expenditure, the interest on that debt may not be deducted under section 163. Sec. 1.163-8T(a)(4)(ii), Ex. 1, Temporary Income Tax Regs., 52 Fed. Reg. 25000 (July 2, 1987). Personal expenditures are defined in the Temporary Income Tax Regs., section 1.163-8T(b)(5), 52 Fed. Reg. 25000 (July 2, 1987), as any expenditure that is not a trade or business expenditure, a passive activity expenditure, or an investment 5The record is devoid of facts or argument which suggests that petitioner's indebtedness interest is allocable to property held for investment, sec. 163(h)(2)(B), passive activity, sec. 163(h)(2)(C), a qualified residence, sec. 163(h)(2)(D), or interest on any unpaid portion of tax imposed by sec. 2001, sec. 163(h)(2)(E).Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011