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making this determination, we employ the following analysis set
forth by the Supreme Court:
Under the formulation now familiar, when we confront an
expert administrator’s statutory exposition, we inquire
first whether “the intent of Congress is clear” as to
“the precise question at issue.” Chevron U.S.A. Inc.
v. Natural Resources Defense Council, Inc., 467 U.S.
837, 842 (1984). If so, “that is the end of the
matter.” Ibid. But “if the statute is silent or
ambiguous with respect to the specific issue, the
question for the court is whether the agency’s answer
is based on a permissible construction of the statute.”
Id., at 843. If the administrator’s reading fills a
gap or defines a term in a way that is reasonable in
light of the legislature’s revealed design, we give the
administrator’s judgment “controlling weight.” Id., at
844. [NationsBank of N.C., N.A. v. Variable Annuity
Life Ins. Co., 513 U.S. 251, 257 (1995).]
Accordingly, we must first consider the statute and determine
whether section 163(h)(2)(A) is silent or ambiguous with respect
to the issue before us. If we conclude that it is, then we must
consider the Secretary’s regulatory interpretation of section
163(h)(2)(A) on this issue and determine whether that
interpretation represents a permissible construction of the
statute. We address each of these considerations in turn.
(2) Silence or Ambiguity
As set forth supra, the relevant inquiry in the instant case
is whether petitioners’ interest on their 1987 income tax
underpayment is “properly allocable to a trade or business”.
We have concluded (supra F (5) Conclusions From the Statute
and the History of the Legislation) that the statutory text does
not on its face provide the answer to the question before us. By
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