Shigenori Kudo and Motomi Kudo, et al. - Page 49

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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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