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A. Statutory Framework
The starting point for the interpretation of a statute is
the language itself. Consumer Prod. Safety Comm. v. GTE
Sylvania, Inc., 447 U.S. 102, 108 (1980); see also United States
v. Bryant, 671 F.2d 450, 453 (11th Cir. 1982); Warbelow’s Air
Ventures, Inc. v. Commissioner, 118 T.C. 579, 583 (2002). We
interpret the statute with reference to the legislative history
primarily to learn the purpose of the statute and to resolve any
ambiguity in the words contained in the text. Allen v.
Commissioner, 118 T.C. 1, 7 (2002) (and cases cited therein); see
also City of New York v. Commissioner, 103 T.C. 481, 489 (1994),
affd. 70 F.3d 142 (D.C. Cir. 1995). Moreover, even where the
statutory language appears clear, we may seek out any reliable
evidence as to legislative purpose. City of New York v.
Commissioner, supra.
1. Section 163
As a general rule, section 163(a) allows a deduction for all
interest paid or accrued within the taxable year on indebtedness.
In the case of an individual, however, section 163(d) limits the
amount of the investment interest expense deduction to the
taxpayer’s net investment income for the taxable year.8 In other
words, the higher the taxpayer’s net investment income, the more
8 The Tax Reform Act of 1969, Pub. L. 91-172, sec. 221(a),
83 Stat. 574, originally enacted sec. 163(d), effective for
taxable years beginning after Dec. 31, 1971.
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Last modified: May 25, 2011