- 155 -
See sec. 167(a)(1). Thus, if section 183 applies to the
activities of EA 83-XII and EA 84-III, the depreciation
deductions would be subject to limitation under section
183(b)(2).
On the other hand, the interest deductions claimed by
each partnership under section 163(a) are not subject to
the trade or business requirement. However, the notices
of FPAA determined that the activity of neither partnership
was engaged in for profit, with the result that "all
interest expenses relative to this activity are not
allowable as deductions against ordinary income, but are
separately stated items subject to the investment interest
limitations." The notices of deficiency thus take the
position that, if section 183 applies to the activities of
each partnership, then the interest expense incurred with
respect to the partnership's activities will be treated as
interest on investment indebtedness and will be subject to
the rules prescribed by section 163(d) limiting the
allowable deduction before the limitation under section 183
is computed. See sec. 1.183-1(b)(1)(i), Income Tax Regs.
In the case of a limited partnership, the profit
motive determination under section 183 is made at the
partnership level. See, e.g., Brannen v. Commissioner, 722
F.2d 695 (11th Cir. 1984); Fox v. Commissioner, 80 T.C. 972
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