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Commissioner, 118 T.C. 1, 7 (2002) (and cases cited therein); see
also City of New York v. Commissioner, 103 T.C. 481, 489 (1994),
affd. 70 F.3d 142 (D.C. Cir. 1995). Moreover, even where the
statutory language appears clear, we may seek out any reliable
evidence as to legislative purpose. City of New York v.
Commissioner, supra.
1. Section 163
For individual taxpayers, section 163(a) allows a deduction
for all interest paid or accrued within the taxable year on
indebtedness. Section 163(d), however, limits the amount of the
investment interest expense deduction to the taxpayer’s net
investment income for the taxable year.4 In other words, the
higher the taxpayer’s net investment income, the more investment
interest expense the taxpayer is allowed to deduct for the
taxable year. Furthermore, section 163(d)(2) allows the taxpayer
to carryforward any investment interest expense disallowed under
the general limitation for the taxable year and deduct it as
investment interest expense paid or accrued in the succeeding
taxable year to the extent that the taxpayer has investment
income in that year.
4The Tax Reform Act of 1969, Pub. L. 91-172, sec. 221(a), 83
Stat. 478, 574, originally enacted sec. 163(d) effective for
taxable years beginning after Dec. 31, 1971.
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