- 85 -
WELLS, C.J., dissenting: I respectfully dissent from the
majority’s refusal to follow Redlark v. Commissioner, 106 T.C. 31
(1996), revd. and remanded 141 F.3d 936 (9th Cir. 1998). The
meaning of section 163(h)(2)(A) can be discerned from a plain
reading of the language of that section. Moreover, prior caselaw
defined the required nexus between an interest expense on a
deficiency and a trade or business, and Congress did not indicate
any intent to overturn these cases. Also, the majority placed
undue emphasis and reliance on the Blue Book in validating
section 1.163-9T(b)(2)(i)(A), Temporary Income Tax Regs., 52 Fed.
Reg. 48407 (Dec. 22, 1987) in contravention of precedent.
The majority contends that the language of section
163(h)(2)(A) is ambiguous, but the majority provides little
analysis of the statute itself. Section 163(h)(2)(A) provides as
follows:
Sec. 163(h) Disallowance of Deduction for Personal
Interest. -–
(1) In general.-–In the case of a taxpayer other
than a corporation, no deduction shall be allowed under
this chapter for personal interest paid or accrued
during the taxable year.
(2) Personal interest.-–For purposes of this
section, the term “personal interest” means any
interest allowable as a deduction under this chapter
other than–
(A) interest paid or accrued on indebtedness
properly allocable to a trade or business (other
than the trade or business of performing services
as an employee).
Page: Previous 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 NextLast modified: May 25, 2011