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for the production or collection of income.
Section 163(a) generally allows a deduction for all interest
paid or accrued during the taxable year on indebtedness. How-
ever, in the case of a taxpayer other than a corporation, section
163(h) generally disallows any deduction for "personal interest".
The term “personal interest” is defined to mean any interest
allowable as a deduction under chapter 1 of the Code other than,
inter alia, interest paid or accrued on indebtedness properly
allocable to a trade or business (other than the trade or busi-
ness of performing services as an employee), any investment
interest, and any interest which is taken into account under
section 469 in computing income or loss from a passive activity
of the taxpayer. Sec. 163(h)(2)(A), (B), and (C). The term
“investment interest” means, in general, any interest allowable
as a deduction under chapter 1 of the Code which is paid or
accrued on indebtedness properly allocable to property held for
investment. See 163(d)(3)(A). Investment interest does not
include, inter alia, any interest which is taken into account
under section 469 in computing income or loss from a passive
activity of the taxpayer. Sec. 163(d)(3)(B)(ii). Although
investment interest and interest which is taken into account
under section 469 in computing income or loss from a passive
activity of the taxpayer are excepted from the definition of the
term “personal interest”, the deductibility of the first two
types of interest is subject to certain other limitations. See
secs. 163(d)(1), 469(a).
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