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however, may limit or prohibit a taxpayer from deducting
indebtedness interest. Sec. 163. For example, section 163(h)
provides that a taxpayer other than a corporation may not deduct
personal interest.14 Sec. 163(h). Excluded from the definition
of personal interest is investment interest. Sec. 163(h)(2)(B).
14 Sec. 163(h)(2) provides, in pertinent part, as follows:
(2) Personal interest.--For purposes of this
subsection, the term "personal interest" means any interest
allowable as a deduction under this chapter other than--
(A) interest paid or accrued on indebtednes
properly allocable to a trade or business (other than
the trade or business of performing services as an
employee),
(B) any investment interest (within the meaning of
subsection (d)),
(C) any interest which is taken into account under
section 469 in computing income or loss from a passive
activity of the taxpayer,
(D) any qualified residence interest (within the
meaning of paragraph (3)), and
(E) any interest payable under section 6601 on any
unpaid portion of the tax imposed by section 2001 for
the period during which an extension of time for
payment of such tax is in effect under section 6163 or
6166 or under section 6166A (as in effect before its
repeal by the Economic Recovery Tax Act of 1981).
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