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Taking into account “all those factors” that bear upon its
persuasiveness (see the above quotation from United States v.
Mead Corp., 533 U.S. 218, 228 (2001)), namely--
(1) The unambiguous statutory language of section
163(h)(2)(A) under which all interest expense properly
allocable to a trade or business is deductible;
(2) The relevant legislative history;
(3) The case law existing at the time section 163(h) was
enacted in 1986 that allowed a deduction for income tax
deficiency interest relating to a taxpayer’s business;7
(4) The language of section 1.163-9T(b)(1)(i) Temporary
Income Tax Regs., supra, and the language of section 1.163-
8T(c)(3)(ii), Temporary Income Tax Regs., supra,8 both of
which would support an allocation and the deduction of an
individual taxpayer’s trade or business related income tax
deficiency interest; and
(5) The lack of any indication that Treasury or respondent,
prior to promulgation of section 1.163-9T(b)(2)(i)(A),
Temporary Income Tax Regs., supra, under which a per se
disallowance rule was adopted affecting thousands of
individual taxpayers9, gave any significant policy
consideration to the question of statutory interpretation at
issue herein;
6(...continued)
thereafter automatically sunset after 3 years. Sec. 7805(e).
7 See Reise v. Commissioner, 35 T.C. 571 (1961), affd. 299
F.2d 380 (7th Cir. 1962); Polk v. Commissioner, 31 T.C. 412
(1958), affd. 276 F.2d 601 (10th Cir. 1960); Standing v.
Commissioner, 28 T.C. 789 (1957), affd. 259 F.2d 450 (4th Cir.
1958).
8 Note that sec. 1.163-8T(c)(3)(ii), Temporary Income Tax
Regs., was promulgated on July 2, 1987, 52 Fed. Reg. 25001
(July 2, 1987), prior to promulgation on Dec. 22, 1987 of sec.
1.163-9T(b)(2)(i)(A), Temporary Income Tax Regs., 52 Fed. Reg.
48409 (Dec. 22, 1987).
9 See the dissenting opinion of Chief Judge Wells.
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