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unwarranted restriction” by requiring payment of the obligation.
Perkins v. Commissioner, supra at 760.
Petitioners argue that we rejected respondent’s restrictions
on the deductibility of interest on contested deficiencies well
after the Thompsons had deducted such interest. At that time,
they argue, section C.1.c. of Ann. 86-108 operated to deny the
claimed deduction. Petitioners’ argument, in sum, is that
respondent should have disallowed the Thompsons’ 1986 interest
deduction under an incorrect legal theory. Petitioners
essentially ask that we include in the denominator of the
settlement fraction a tax benefit to which the Thompsons were
already entitled under a correct application of the law. We
decline to do so, regardless of whether McWade played any part in
respondent’s allowance of the deduction.
1987
The Thompsons reported deficiency interest expense of
$42,945 on Schedule A of their 1987 return and deducted 65
percent of that amount ($27,914). See supra note 14. The
claimed deduction appears to derive from Poltash’s misguided
attempt to carry over the unused portion of the $59,545 of
deficiency interest expense reported on Schedule A of the
Thompsons’ 1986 return. See supra note 15. Such a deduction was
improper; the Internal Revenue Code did not and does not permit
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