Paul E. and Jane Anne Gladden Emerson - Page 6




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          residence interest".  Sec. 163(h)(2)(D).  "Qualified residence              
          interest" means interest which is paid during the year on                   
          acquisition indebtedness or home equity indebtedness with respect           
          to any qualified residence of the taxpayer.  Sec. 163(h)(3)(A).             
          A "qualified residence" may be the principal residence of the               
          taxpayer.  Sec. 163(h)(5)(A)(i)(I).                                         
               In this case, petitioners had a mortgage on the home they              
          lived in.  Petitioners paid "interest payments" on their                    
          mortgage to "Retirement Account Inc., F.O.B. Allen S. Lewis IRA"            
          (Allen Lewis).  During 1995, petitioners wrote 11 checks which              
          were written out to or referenced Allen Lewis and totaled                   
          $16,425.  Petitioners also had a mortgage on their home with West           
          Coast Bank.  During 1995, petitioners wrote 32 checks for the               
          "interest payments" to West Coast Bank in the total amount of               
          $21,698.71.  Petitioners claimed $3,165 of mortgage interest                
          expense on their 1995 return, which petitioner prepared himself.            
          On their 1994 return, petitioners claimed $8,450 of mortgage                
          interest expense.  Petitioners’ 1994 return was prepared by an              
          accountant.  While we believe that petitioners' payments did not            
          consist solely of interest expense, we find that a portion of               
          these payments must have been for mortgage interest on their                
          home.  Although the interest portion of the payments probably was           
          higher than the amount claimed on the 1995 return, petitioners              
          did not provide sufficient evidence of the amount which was                 








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