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B. Redlark
1. Tax Court
In Redlark, we noted that the 9T regulation was an
interpretive, rather than a legislative, regulation. Redlark v.
Commissioner, 106 T.C. at 38. We respectfully disagreed with the
Court of Appeals for the Eighth Circuit’s conclusion and held
that the 9T regulation was unreasonable and an impermissible
reading of the statute. Id. at 47.
In dissent, Judge Halpern stated that in the absence of
temporary regulations a reasonable interpretation of section
163(h)(2)(A) would include the interest here in question and that
deficiency interest attributable to nonemployee trade or business
income is not personal interest. Id. at 65 (Halpern, J.,
dissenting). In his view, however, we should have upheld the 9T
regulation as valid as it was entitled to Chevron deference. Id.
at 66 (Halpern, J., dissenting).
2. Ninth Circuit
The U.S. Court of Appeals for the Ninth Circuit, agreeing
with the Eighth Circuit, reversed. Redlark v. Commissioner, 141
F.3d at 938, 941. The Court of Appeals for the Ninth Circuit,
like that of the Eighth Circuit, also treated the 9T regulation
as a legislative regulation. Id. at 940. The court gave the 9T
regulation Chevron deference and stated that the issue was
whether the 9T regulation was a permissible interpretation of
section 163(h). Id. at 938. The Court of Appeals for the Ninth
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