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with an indefinite carryforward of disallowed
investment interest.
Investment interest limitation
Interest subject to the limitation.–-Under the
bill, interest subject to the investment interest
limitation is all interest (other than consumer
interest and qualified residence interest) on debt not
incurred in connection with the taxpayer’s trade or
business. * * *
* * * * * * *
Consumer interest limitation
Under the bill, consumer interest is not
deductible. Consumer interest generally includes all
interest not incurred or continued in connection with
the conduct of a trade or business (other than the
performance of services as an employee) * * *. Thus,
consumer interest includes, for example, interest on a
loan to purchase an automobile for personal use, and
credit card interest incurred for personal expenses.
In all material respects, section 1421 of H.R. 3838 as
passed by the Senate on June 24, 1986, was identical to section
1421 of H.R. 3838 as reported by the Senate Finance Committee.
Section 1401 of the Senate amendment as reported by the
Finance Committee proposed to add a new section, section 469,
relating to limitations on losses and credits from passive
activities. Neither the House bill, nor the President’s
Proposals contained a corresponding provision. H. Conf. Rept.
99-841, II-137 (1986), 1986-3 C.B. (Vol. 4) 137; Joint Committee
on Taxation, Comparison of Tax Reform Provisions of H.R. 3838 as
passed by the House and Senate (JCS-15-86), 51 (July 15, 1986).
(Section 501 of the House-passed version of the bill did,
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