Regulation Denying Deduction for Interest on Tax Deficiency Is Void.

TAXATION; INCOME tax; INTERNAL revenue; UNITED States. Internal Revenue Service; INTEREST (Finance); BUSINESS enterprises; BUSINESS tax; TAX deductions; DEBT

The article reports on the claims by a family who paid interest on income tax deficiencies for prior years. On their schedules for those years they deducted part of that interest, claiming it was allocable to business debt, that is to tax adjustments relating to their unincorporated business. The Internal Revenue Service disallowed the interest deduction counterclaiming that under temporary regulations section 1.163-9T(b)(2)(A), interest on individual income tax deficiencies is personal and nondeductible.