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“(h) Disallowance of Deduction for Consumer
Interest.--
“(1) In general.--In the case of a taxpayer other
than a corporation, no deduction shall be allowed under
this chapter for consumer interest paid or accrued
during the taxable year.
“(2) Consumer interest.--For purposes of this
subsection--
“(A) In general.--The term ‘consumer
interest’ means any interest allowable as a
deduction under this chapter other than interest
paid or accrued on indebtedness incurred or
continued in connection with--
“(i) the conduct of a trade or business
(other than the trade or business of
performing services as an employee), or
“(ii) an activity described in section
212.
“(B) Exception for qualified residence
interest.--The term ‘consumer interest’ shall not
include any qualified residence interest.[”]
The Senate Finance Committee report, provides, in pertinent
part, as follows (S. Rept. 99-313, at 802-806 (1986), 1986-3 C.B.
(Vol. 3) 1, 802-806):
G. Interest Deduction Limitations (sec. 1421 of the
bill and secs. 163(d) and (h) of the Code)
Present Law
* * * * * * *
Other interest
Under present law, no limitation is imposed under
section 163(d) on the deductibility of interest on
indebtedness incurred for other purposes, e.g. to
purchase or carry consumption goods. Interest on
indebtedness incurred in connection with the taxpayer’s
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