- 13 -
In sum, we conclude that the expenses in question fit within
the plain language of section 172(f)(1)(B). Under the
circumstances, we are not persuaded by respondent’s arguments
that we should narrowly construe the provision to exclude those
expenses or that respondent’s interpretation of section
172(f)(1)(B) is compelled by the legislative history of the
provision.
Additionally, we reject respondent’s argument that all
interest (Federal and State) that accrued within 3 years of
January 1, 1992, should be excluded from the computation of
petitioner’s specified liability losses. Respondent relies on
section 172(f)(1)(B)(i), which provides that, to qualify as a
specified liability loss, the act (or failure to act) giving rise
to such liability must occur at least 3 years before the
beginning of the taxable year. Respondent contends that the act
giving rise to interest on a tax deficiency arises daily as the
taxpayer fails to pay the underlying tax.
We hold that the act giving rise to petitioner’s liability
for interest on its Federal and State tax deficiencies was the
act of filing erroneous tax returns, and, as a consequence,
failing to pay the correct amount of tax on or before the last
date prescribed for payment. See Host Marriott Corp. v. United
States, supra. Simply put, respondent’s position confuses the
method of computing interest under section 6621, under which
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011