- 42 -
owners of the residence,21 and the two loans secured by the
residence were in Mahmoud and Fuad’s names. The mere fact the
Foster City residence was petitioners’ personal residence does
not, as petitioners suggest, entitle them to deduct mortgage
interest payments made on the residence. See Loria v.
Commissioner, T.C. Memo. 1995-420; Tuer v. Commissioner, T.C.
Memo. 1983-441. To be able to deduct any payments of mortgage
interest in 1995, petitioners must establish that they were the
beneficial or equitable owners of the Foster City residence. See
Trans v. Commissioner, supra; Uslu v. Commissioner, supra; Conroy
v. Commissioner, supra.
We are unable to find any substance in petitioners’
contentions that they were the beneficial or equitable owners of
the residence in 1995, and we are unable to determine on what
legal theory they base their claims. Although Federal law
determines the tax consequences of an interest or right in
property, State law determines the nature of the interests and
rights in property. See Morgan v. Commissioner, 309 U.S. 78
(1940). Petitioners have provided no evidence that under
California law they were the beneficial or equitable owners of the
21 Although petitioners argue that Fuad and Mahmoud
“acquired title” to the residence and that only Mahmoud
“purchased” the residence, Fuad’s testimony does not support
their argument: “I bought the house and he [Mahmoud] gave me
money from back home, and I put my money, so we bought it
together.”
Page: Previous 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 NextLast modified: May 25, 2011