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E. Kikalos--Seventh Circuit
The U.S. Court of Appeals for the Seventh Circuit
acknowledged that the 9T regulation is an interpretive
regulation. Kikalos v. Commissioner, 190 F.3d 791, 795 (7th Cir.
1999), revg. T.C. Memo. 1998-92 (which relied on our opinion in
Redlark). The Court of Appeals for the Seventh Circuit stated
that “interpretive regulations of this sort, when subject to a
notice-and-comment procedure, are reviewed deferentially, under
the criteria articulated in” Chevron and its progeny. Id. The
court noted that the 9T regulation did not go through notice-and-
comment and that such a regulation might be entitled to no more
deference than a proposed regulation.4 Id. at 796. The Court of
Appeals for the Seventh Circuit, however, left for another day
what deference a regulation of this sort is due because the
parties assumed Chevron deference applied. Id. Therefore, the
court accorded the 9T regulation Chevron deference. Id.
The Court of Appeals for the Seventh Circuit acknowledged
that in light of the cases predating the Tax Reform Act of 1986
(TRA 1986), Pub. L. 99-514, 100 Stat. 2085, one could argue with
some force that where an income tax deficiency results from a
taxpayer’s trade or business the interest accrued on that
deficiency should be allocable to the trade or business. Id. at
4 Proposed regulations are generally not afforded any more
weight than that of the position advanced by the Commissioner on
brief. Gen. Dynamics Corp. v. Commissioner, 108 T.C. 107, 120
(1997); Laglia v. Commissioner, 88 T.C. 894, 897 (1987).
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