- 8 - 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.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011