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employment. However, petitioners did not maintain logs or other
contemporaneous records to substantiate the expenses incurred in
the use of the vehicle. Such records are required under section
274(d). Petitioners, therefore, are not entitled to a deduction
for unreimbursed employee expenses for 1998.4
The third issue is whether petitioners are entitled to a
deduction for home mortgage interest for the years 1998 and 1999
in excess of the amounts conceded by respondent at trial. The
amounts that respondent did not concede represented points or
prepaid interest petitioners incurred in the refinancing of their
residence in each of the years in question. The total points,
however, were not independently paid by petitioners but were
financed by the lender and included as part of the gross loan.
Generally, interest paid on home indebtedness is deductible
by virtue of section 163(h)(2)(D), which provides that any
qualified residence interest does not constitute nondeductible
personal interest. Prepaid finance charges, to the extent such
charges represent deferred interest on a loan, are generally
deductible over the life of the loan. Sec. 461(g). However,
where the points (prepaid interest) are not paid separately by
4 Petitioners also claimed a $300 deduction for tax
preparation fees that was disallowed by respondent. Even if
petitioners paid this amount, such amount is less than the sec.
67(a) limitation; therefore, petitioners would attain no tax
benefit from this expense.
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