- 6 - is silent as to the sources of the delinquent tax liabilities, we sustain respondent's determination that the deductions for interest reported on petitioners' 1995 Federal income tax return are personal interest and not allowed. Because we agree with respondent that petitioners failed to prove that the interest expense was incurred on indebtedness properly allocable to petitioners' trade or business or to their investment activities, we need not and do not consider sec. 1.163-9T(b)(2)(i)(A), Temporary Income Tax Regs., 52 Fed. Reg. 48409 (Dec. 22, 1987), in this case.3 Addition to Tax Respondent determined that petitioners are liable for an addition to tax for 1995 pursuant to section 6651(a)(1), which imposes an addition to tax for a taxpayer's failure to file a required return on or before the date prescribed, including extensions. The amount added to the tax under section 6651(a)(1) is 5 percent for each month or fraction thereof during which the return is late, up to a maximum of 25 percent. The addition to tax is inapplicable, however, if the taxpayer's failure to file 3Sec. 1.163-9T(b)(2)(i)(A), Temporary Income Tax Regs., 52 Fed. Reg. 48409 (Dec. 22, 1987), states that personal interest includes interest "Paid on underpayments of individual Federal, State or local income taxes and on indebtedness used to pay such taxes (within the meaning of �1.168-8T), regardless of the source of the income generating the tax liability". See Redlark v. Commissioner, 106 T.C. 31 (1996), revd. 141 F.3d 936 (9th Cir. 1998).Page: Previous 1 2 3 4 5 6 7 8 Next
Last modified: May 25, 2011