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validity of Countryside’s debt to CB&T (which, pursuant to
participating partner’s concession that CLPP and MP may be
disregarded, includes MP’s $3.4 million debt to CB&T), that debt
must be accepted as bona fide for purposes of sections 731(a)(1)
and 752.
Respondent’s reliance on Goldstein founders on the fact that
Countryside, rather than Mr. Winn and Mr. Curtis, occupies Mrs.
Goldstein’s position (paying more interest on the borrowings than
was received on the investment purchased with those borrowings).
The comparable issue in this case would be whether Countryside is
entitled to deduct the interest paid on the loans from CB&T.
Respondent has not raised an interest deductibility issue in this
case, and there is nothing, on that score, for us to resolve.
The Goldstein case, however, does support respondent’s
argument that literal compliance with the conditions for the
application of a particular Code section (in the Goldstein case,
section 163(a); in this case, sections 731(a)(1) and 752) does
not mandate application of the section where the transaction
giving rise to that application fails to comport with Congress’s
purpose in enacting the section. The question before the Court
of Appeals in Goldstein was, at heart, one of statutory
construction, i.e., determining whether, despite the broad scope
of section 163(a), Congress intended to allow an interest
deduction for interest paid on funds borrowed “for no purposive
reason * * * other than * * * securing * * * [a tax] deduction”.
Goldstein v. Commissioner, 364 F.2d at 742. Courts commonly
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