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inter alia, “all interest not incurred in connection with a trade
or business” to the then governing limitation on the deduction of
investment interest under section 163(d). The President’s
Proposals at 323. Underlying this proposal was a concern that
“consumer interest”, defined as “i.e., interest incurred to
acquire personal assets, such as a car or vacation home”,
undermined the then existing “limitations on investment interest
and interest incurred to acquire tax-exempt bonds.” Id. at 322-
323.
(3) The House Bill
Subsection (d) of section 163 in then-current law was
entitled “Limitation on Interest on Investment Indebtedness.” In
section 402(a) of H.R. 3838, the Ways and Means Committee
proposed to deal with several concerns by revising subsection
(d), which would be reentitled “Limitation on Nonbusiness
Interest.” The bill combined the different concerns into a
single overall test, as appears from proposed new paragraphs (1)
and (3) of subsection (d), as follows:
SEC. 402. LIMITATION ON DEDUCTION FOR NONBUSINESS INTEREST.
(a) General Rule.--Subsection (d) of section 163
(relating to limitation on interest on investment
indebtedness) is amended to read as follows:
“(d) Limitation on Nonbusiness Interest.--
“(1) In general.--In the case of a taxpayer other
than a corporation, the amount allowed as a deduction
under this chapter for nonbusiness interest for any
taxable year shall not exceed the sum of--
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