Redlark v. Comm'r
United States Tax Court
Ps deducted the amount of interest on the portion of a deficiency in Federal income tax arising out of adjustments caused by accounting errors of their unincorporated business. They claimed that the interest was properly allocable to business indebtedness and therefore not personal interest under sec. 163(h)(2)(A), I.R.C. R disallowed such deduction on the ground that it was personal interest under sec. 1.163-9T(b)(2)(I)(A), Temporary Income Tax Regs., 52 Fed.
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Ps deducted the amount of interest on the portion of a deficiency in Federal income tax arising out of adjustments caused by accounting errors of their unincorporated business. They claimed that the interest was properly allocable to business indebtedness and therefore not personal interest under sec. 163(h)(2)(A), I.R.C. R disallowed such deduction on the ground that it was personal interest under sec. 1.163-9T(b)(2)(I)(A), Temporary Income Tax Regs., 52 Fed. Reg. 48409 (Dec. 22, 1987), and limited Ps' total interest deduction to the amounts allowed by sec. 163(h)(5), I.R.C.Held, sec.…
1Opinion of the Court
OPINION
Tannenwald, Judge:
Respondent determined deficiencies in petitioners’ 1989 and 1990 Federal income taxes in the amounts of $46,409 and $6,927, respectively. The issue in dispute is whether petitioners may deduct certain interest on Federal income tax deficiencies, paid by petitioners in 1989 and 1990, where the deficiencies arose in part due to a correction for errors made in computing petitioners’ income from their business.
All the facts have been stipulated. The stipulation of facts and attached exhibits are incorporated herein by this reference.
Background
At the time the petition was…
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