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principal residence, which does not qualify as “property held for
investment”. See sec. 163(d)(5)(A). (As noted previously, there
is no evidence in the record as to petitioners’ use of the
$86,000 balance of the loans.) Thus, the $64,000 interest
payment is not allocable to an “investment expenditure”, which is
defined, in pertinent part, as “an expenditure * * * properly
chargeable to capital account with respect to property held for
investment”. See sec. 1.163-8T(a)(4)(C), (b)(3), Temporary
Income Tax Regs., 52 Fed. Reg. 24999 (July 2, 1987). As a
result, no portion of the $64,000 interest payment qualifies as
“investment interest” within the meaning of section 163(h)(2)(B).
E. Conclusion
The $64,000 interest payment constituted the payment of
nondeductible “personal interest” under section 163(h).
To reflect the foregoing,
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011