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interest on tax deficiencies arising from a sole proprietorship
are not within personal interest because the previous sentence
excepted that class of interest from “personal interest”. If the
conference committee intended all interest on deficiencies to be
included in personal interest, then the conference committee
could have left the word “generally” out of the last sentence, so
that personal interest would cover all interest on deficiencies.
The majority holds that the Conference Committee Report is
not clear and accordingly justifies its reliance on the Joint
Committee on Taxation General Explanation of the Tax Reform Act
of 1986, pp. 262-264, 266, published May 4, 1987 (Blue Book).
Majority op. p. 35. The majority argues that the confusion is
further exacerbated because the Blue Book provides that interest
on a tax deficiency relating to a sole proprietorship is
considered personal interest. The majority goes too far in
rejecting the Conference Committee Report in favor of the Blue
Book.
In upholding the validity of section 1.163-9T(b)(2)(i)(A),
Temporary Income Tax Regs., supra, and refusing to follow Redlark
v. Commissioner, 106 T.C. 31 (1996), the majority provides:
As applied to the instant case, section 1.163-
9T(b)(2)(I)(A), Temporary Income Tax Regs., supra, treats
petitioners’ payment of interest as nondeductible “personal
interest”. The text of section 163(h)(2)(A) does not compel
this result. The relevant legislative history, however,
lends some support to this interpretation of the statute.
[Majority op. pp. 47-48.]
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