Claudia J. Miner - Page 11




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          personal interest, sec. 163(h)(2)(B), and may be deducted to the            
          extent of the taxpayer’s net investment income.4  Sec. 163(d).              
          Investment interest includes interest which is paid or accrued on           
          indebtedness properly allocable to property held for investment.            
          Sec. 163(d)(3)(A).                                                          
               2.   Whether Margin Interest Is Investment Interest                    
               Margin interest is interest charged to customers on margin             
          debt incurred in connection with purchases of stock or                      
          securities.  In re Olympia Brewing Co. Sec. Litig., 612 F. Supp.            
          1370, 1374 (N.D. Ill. 1985).  Margin interest generally is                  
          investment interest.  See, e.g., Estate of Yeager v.                        
          Commissioner, 889 F.2d 29 (2d Cir. 1989), revg. on another issue,           



               4  Neither party discussed whether petitioner’s margin                 
          interest is deductible under sec. 163(d).  Sec. 163(d) provides             
          in pertinent part:                                                          
               SEC. 163(d). Limitations on Investment Interest.–-                     
                    (1) In General.--In the case of a taxpayer other                  
               than a corporation, the amount allowed as a deduction                  
               under this chapter for investment interest for any                     
               taxable year shall not exceed the net investment income                
               of the taxpayer for the taxable year.                                  
                        *     *     *     *     *     *     *                         
                    (3) Investment Interest.--For purposes of this                    
               subsection--                                                           
                    (A) In general.--The term “investment interest”                   
               means any interest allowable as a deduction under this                 
               chapter (determined without regard to paragraph (1))                   
               which is paid or accrued on indebtedness properly                      
               allocable to property held for investment.                             





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