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indebtedness. Section 163(h)(1), however, provides that, in the
case of a taxpayer other than a corporation, no deduction shall
be allowed for personal interest paid or accrued during the
taxable year. Section 163(h)(2) defines "personal interest" to
mean any interest allowable as a deduction other than, inter
alia, "any qualified residence interest". Sec. 163(h)(2)(D).
Thus, qualified residence interest is deductible under section
163(a). The term "qualified residence interest" is defined, in
pertinent part, in section 163(h)(3)(A)(i), as any interest paid
or accrued during the taxable year on "acquisition indebtedness
with respect to any qualified residence of the taxpayer".
The "indebtedness" for purposes of section 163 must, in
general, be an obligation of the taxpayer and not an obligation
of another. Golder v. Commissioner, 604 F.2d 34, 35 (9th Cir.
1979), affg. T.C. Memo. 1976-150; Smith v. Commissioner, 84 T.C.
889, 897 (1985), affd. without published opinion 805 F.2d 1073
(D.C. Cir. 1986); Hynes v. Commissioner, 74 T.C. 1266, 1287
(1980). However, section 1.163-1(b), Income Tax Regs., provides,
in pertinent part:
Interest paid by the taxpayer on a mortgage upon real estate
of which he is the legal or equitable owner, even though the
taxpayer is not directly liable upon the bond or note
secured by such mortgage, may be deducted as interest on his
indebtedness. * * *
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