Paul Trans and Thuy Bich Dang - Page 9




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          the capital gain resulting from the April 1992 sale of this                 
          property.                                                                   
               B.  Mortgage Interest Deductions                                       
               Section 163 allows a deduction for certain qualified                   
          interest.  No deduction is generally allowed for personal                   
          interest.  See sec. 163(h).  As an exception to this rule, a                
          deduction is allowable for certain interest paid with respect of            
          a “qualified residence”.  See sec. 163(h)(3).  For this purpose,            
          “qualified residence” means generally the taxpayer’s principal              
          residence and one other dwelling unit that the taxpayer selects             
          and uses for personal purposes for a specified number of days               
          during the taxable year.  See secs. 163(h)(4), 280A(d).  The                
          determination as to whether any property is a qualified residence           
          is made as of the time the interest is accrued.  See sec.                   
          163(h)(3).                                                                  
               We have concluded that petitioners sold the Danville                   
          property to Haq in April 1992.  There is no evidence in the                 
          record that petitioners used the Danville property as a residence           
          after that date.  Accordingly, we sustain respondent’s                      
          disallowance of $17,000 of mortgage interest deductions                     
          attributable to the period after April 1992.8                               



               8 While it seems questionable that only about half of the              
          total interest payments for 1992 would be attributable to                   
          interest payments made during the last two thirds of the year, we           
          note that any error in this regard appears to be in petitioners’            
          favor, and we do not undertake to recompute the amount of                   
          respondent’s disallowance.                                                  

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