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Heritage Inn and Sunbury building partnerships only remotely
relate to petitioner’s trade or business. We conclude that the
interest that petitioner paid in 1993 and 1994 relating to the
Sunbury building general partnership and Heritage Inn limited
partnership is not trade or business interest.
Petitioner contends that respondent is estopped from
contending that he may not deduct the interest at issue as trade
or business interest because respondent had not disallowed it in
prior audits. We disagree. The Commissioner’s failure to raise
an issue in a prior audit does not estop the Commissioner from
raising it in an audit for a later year. See Knights of Columbus
Council #3660 v. United States, 783 F.2d 69, 72-73 (7th Cir.
1986); Hawkins v. Commissioner, 713 F.2d 347, 351-352 (8th Cir.
1983), affg. T.C. Memo. 1982-451.
4. Conclusion
We conclude that petitioner may deduct the interest that he
paid in 1993 and 1994 relating to loans he used for the nursing
homes under sections 162(a) and 163(a). We also conclude that
the interest that petitioner paid in 1993 and 1994 relating to
the Sunbury building and Heritage Inn Partnerships is not trade
or business interest because petitioner acquired and held them
for investment.
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