William Lenehan III and Barbara Lenehan - Page 8




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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          Stat. 478, 574, originally enacted sec. 163(d) effective for                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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