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Petitioner deducted home mortgage interest of $20,180 in
1990, $32,741 in 1991, and $7,497 in 1993. Respondent argues
that the mortgage interest is investment interest. Petitioner
testified that he “placed a mortgage on it [petitioners’
residence] to bail out some of these items [other debts]”.
Respondent did not establish that the indebtedness at issue was
not QRI. Further, respondent did not present additional evidence
to prove that the indebtedness at issue was not secured by
petitioners’ qualified residence. There is nothing in this
record which would lead us to the conclusion that respondent’s
characterization of the interest as investment interest is
correct.
We are also unable to discern when the debt was incurred.
Respondent’s agent, Michael A. Halpert, testified that he
“reviewed the petitioner statements he received from banks and
other lending institutions reflecting the amount of interest he
had paid in the respective years”. Respondent did not produce
any of these documents at trial, and the record is silent as to
when petitioners purchased their residence. It is possible that
the debt could qualify as pre-October 13, 1987, debt, in which
case the use of the funds from the indebtedness is not relevant
to our inquiry. Respondent failed to establish that the interest
was not QRI. We hold for petitioners on this issue.
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