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balance of $22,915 as an interest expense on Schedule A of their
1996 return.
In the notice of deficiency sent to petitioners for 1995 and
1996, respondent determined that the deductions that petitioners
claimed for investment interest and Schedule C interest expenses
represented nondeductible personal interest expenses under
section 163(h).
Petitioners filed a petition contesting the notice of
deficiency. When the instant case was called for trial, the
parties agreed to submit the case as fully stipulated. The
Court, pursuant to Rule 151, ordered the submission of briefs 75
days following trial. Petitioners failed to submit a brief.
After respondent submitted an initial brief, the Court granted
respondent's request for leave not to file a reply brief.
Discussion
Interest Deductions for Delinquent Payment of Taxes
Petitioners contend in their petition that their deductions
were allowable as (1) interest paid or accrued on indebtedness
properly allocable to a trade or business, or (2) investment
interest. Respondent contends that the disputed amounts are
nondeductible personal interest expenses. It is well settled
that determinations made by the Commissioner to disallow
deductions in a notice of deficiency normally are presumed to be
correct, and the taxpayer bears the burden of proving that those
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