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Section 212 provides a deduction for all ordinary and
necessary expenses paid or incurred with respect to management,
conservation, and maintenance of property held for the production
of income, including real property rental. Sec. 1.212-1(h),
Income Tax Regs. Since the record is void of adequate receipts
or records that would substantiate petitioner’s claimed expenses,
we sustain respondent’s determination.3
3. Schedule A Deductions for 1995
In 1995, petitioner deducted $4,135 for investment interest
on Schedule A. Petitioner attributed the amount to disallowed
investment interest from taxable year 1994.
In the case of a cash basis taxpayer, section 163(a) allows
for a deduction of all interest paid during the taxable year.
Individual taxpayers are not permitted to deduct personal
interest. Sec. 163(h)(1). Personal interest does not include
investment interest. Sec. 163(h)(2)(B). Investment interest is
any interest allowable as a deduction which is paid or accrued on
indebtedness properly allocable to property held for investment.
Sec. 163(d)(3)(A). A taxpayer may deduct investment interest up
to the amount of net investment income. Sec. 163(d)(1).
Petitioner did not establish that investment interest was
disallowed from 1994, nor did he establish that he paid
3 Even if petitioner had produced receipts and records to
support his deductions, petitioner did not hold the Bahamas
property for the production of income. Secs. 183(a), (c); 212.
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Last modified: May 25, 2011