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loan, the fact that the return (cashflow) on or from the
property will be sufficient to satisfy the payments under
the loan, and the fact that the loan agreements place
restrictions on the disposal or use of the property. See
id.
Where it is found that an interest deduction is
definitely related solely to specific property, the
interest deductions are allocated solely to the gross
income derived from the specific property. See sec. 1.861-
8(e)(2)(iv)(B), Income Tax Regs. Thus, the income from the
specific property is placed in a grouping of gross income
in accordance with the usual rules for sourcing gross
income, see secs. 1.861-2 through 1.861-7, Income Tax
Regs., and the interest deduction is directly allocated to
such gross income, see sec. 1.861-8(e)(2)(iv)(B), Income
Tax Regs.
Finally, in the case of nonbusiness interest, such
as interest paid by an individual on a mortgage on his
personal residence, the interest is treated as not
definitely related to any class of gross income, see sec.
1.861-8(b)(5), (c)(2), Income Tax Regs., and is apportioned
ratably between the statutory grouping (or among the
statutory groupings) and the residual grouping in
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