t c no united_states tax_court edward a robinson iii and diana r robinson petitioners v commissioner of internal revenue respondent docket no filed date p-h operated a law practice as a sole_proprietorship at all relevant times r audited ps’ joint tax_return and made several adjustments to the schedules a and c attached to this tax_return ps agreed to r’s adjustments and the resulting deficiencies and additions to tax in r seized real_property that ps owned in r sold the property and applied the proceeds to ps’ underpayment of their income_tax_liability and interest thereon on schedule c of their joint tax_return ps deducted the underpayment interest that had been thus paid held insofar as sec_1_163-8t temporary income_tax regs fed reg date and sec_1 9t b a temporary income_tax regs fed reg date apply under the circumstances herein to characterize the underpayment interest thus paid in as not being interest on indebtedness properly allocable to a trade_or_business within the meaning of sec -- - h a i r c and therefore as not being deductible under ch i r c these regulations are valid held further 106_tc_31 revd and remanded 141_f3d_936 9th cir will no longer be followed held further ps are not entitled to deduct the interest they paid in on account of the underpayment of their income_tax_liability charles b sklar’ for petitioners joseph ineich for respondent chabot judge respondent determined a deficiency in federal individual income_tax for against petitioners in the amount of dollar_figure the issue for decision is whether petitioners may deduct for the interest they paid in on their federal individual income_tax underpayment ' cheryl r frank and gerald w kelly jr appeared on petitioners’ behalf at the trial a few months later before filing any briefs they moved for leave to withdraw as counsel the court granted their motion later charles b sklar entered his appearance and thereafter represented petitioners on brief of this total dollar_figure is income_tax under ch and dollar_figure is self-employment_tax under ch unless indicated otherwise all section and chapter references are to sections and chapters of the internal_revenue_code_of_1986 as in effect for the section references in table infra are to this code as in effect for respondent disallowed petitioners’ dollar_figure deduction of continued - - findings_of_fact some of the facts have been stipulated the stipulations and the stipulated exhibits are incorporated herein by this reference petitioners edward a robinson iii hereinafter sometimes referred to as edward and diana r robinson resided in louisiana when they filed their petition in the instant case a bdward’s background in edward was graduated from grambling state university cum laude with a double major in political science and english in edward received a master’s degree in criminal jurisprudence from the state university of new york at albany in edward received his law degree from rutgers university edward also was awarded an honorary ll d from world university in tucson arizona after his rutgers graduation edward worked as the chief administrator of the louisiana justice_department edward continued other interest that was reported on the schedule c profit or loss from business attached to their tax_return the dollar_figure interest payment was made in respect of petitioners’ underpayment of their federal individual income_tax_liability the other adjustments that respondent made to petitioners’ return were to petitioners’ schedule a itemized_deductions and to the computation of the self- employment_tax deduction and the self-employment_tax liability for edward a robinson iii these adjustments are computational their resolution depends on our determination of the issue for decision q4e- resigned from this position and opened his own law practice in edward’s law practice focused almost exclusively on personal injury cases at all relevant times edward’s law practice was operated as a sole_proprietorship b return and audit thereof during respondent audited petitioners’ and joint tax returns ’ on their tax_return petitioners reported dollar_figure interest_income and dollar_figure net profit from edward’s law practice on the schedule c petitioners reported dollar_figure gross_receipts dollar_figure cost_of_goods_sold and dollar_figure deductions leading to the dollar_figure net profit on the form_1040 petitioners reported dollar_figure chapter income_tax dollar_figure chapter self-employment_tax dollar_figure addition for underpayment of estimated_tax and no withholding or other_payments for a total of dollar_figure owed petitioners timely paid this dollar_figure respondent proposed adjustments to petitioners’ taxable_income and a deficiency and additions to tax as shown in table we do not make further findings as to because the parties have stipulated that the dollar_figure item which is the basic adjustment in the instant case is entirely interest on the underpayment of petitioners’ tax_liability --- - table item amount unreported income ’ dollar_figure sched c adjustments----net dollar_figure sched a adjustment--- consequential’ dollar_figure sched a adjustments----other deficiency dollar_figure addition--- sec_6653 a dollar_figure addition-- sec_6653 b addition-- sec_6661 dollar_figure ' all of the unreported income was from edward’s law practice reduction in medical_expense_deduction resulting from increase in adjusted_gross_income because of additional income from edward’s law practice fifty percent of the interest on dollar_figure petitioners agreed to these proposed changes and the appropriate amounts were assessed respondent seized certain of petitioners’ property in sold the property in and in applied dollar_figure of the proceeds to petitioners’ interest on the underpayment of their tax_liability the dollar_figure interest payment was not related to any liability on petitioners’ tax_return as originally filed as all such liability had been timely paid this interest payment - - was applied only to interest assessed as a result of the audit deficiency in tax and additions petitioners deducted this dollar_figure as interest other on line 16b of the schedule c edward’s law practice on their tax_return on their tax_return petitioners reported dollar_figure net profit from edward’s law practice sched c dollar_figure royalty income sched e and a dollar_figure loss on sales of business property form on the schedule c petitioners reported dollar_figure gross_receipts dollar_figure cost_of_goods_sold and dollar_figure deductions including the disputed dollar_figure other interest item leading to the dollar_figure net profit on the form_1040 petitioners reported dollar_figure chapter income_tax dollar_figure chapter self-employment_tax dollar_figure addition for underpayment of estimated_tax and dollar_figure estimated_tax payments for a total of dollar_figure owed the dollar_figure was interest_paid in but it was not on indebtedness properly allocable to edward’s law practice petitioners’ only relevant trade_or_business opinion a the parties’ contentions the parties focus their dispute on whether sec_163 prohibits allowance of petitioners’ claimed dollar_figure schedule c - interest_deduction in particular whether the interest is on indebtedness properly allocable to a trade_or_business within the meaning of sec_163 a and therefore exempt from the general disallowance rule_of sec_163 petitioners contend that the dollar_figure interest qualifies for the exemption from the disallowance rule and that a regulation to the contrary is invalid relying on this court’s opinions to that effect in the alternative they contend that the regulation is not an authoritative interpretation of the applicable statutory language the regulation having been issued before the statutory language was enacted respondent relies on the regulation as an authoritative interpretation of an ambiguous statute and notes that the courts of appeals of five different circuits have come to the same conclusion as to the prior opinions on which we relied in invalidating the regulation respondent’s brief states that it is therefore respondent’s position that pre- sec_163 case law is irrelevant to the resolution of the instant case in the alternative respondent contends that if we were to conclude that deficiency_interest attributable to a trade_or_business is deductible then an allocation of the deficiency_interest in this case to the schedule c adjustments and to the schedule a adjustments for the year will be required --- - neither side contends that we should distinguish between the factual settings presented in our two prior opinions on this subject apart from respondent’s alternative contention as to the schedule a adjustments respondent apparently accepts that if the regulations are not valid then the interest_expense resulting from the schedule c adjustments is properly a schedule c deduction b summary of conclusions we agree with respondent’s primary position and much of respondent’s analysis sec_162 allows a deduction for all the ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying on any trade_or_business this includes interest sec_163 allows a deduction for all interest_paid or accrued within the taxable_year on indebtedness this is allowed even if the interest would not be deductible under sec_162 notwithstanding this broad allowance language there are statutory limitations on amounts eg sec_163 relating to investment_interest and prohibitions eg sec_163 relating to registration-required obligations that override not only sec_163 but all of chapter sec_163 or even any other provision of law sec_163 in the instant case we focus on the prohibition in sec_163 h prohibiting any deduction under chapter for - personal_interest the congress has defined this term comprehensively in sec_163 so we focus on the specifics of the relevant part of the definition---- properly allocable to a trade_or_business sec_163 h a --rather than concepts involved in personal examination of the history of the legislation both the sequence of events and the formal explanations does not lead to any clear answer as to the meaning of the finally adopted statutory language it is clear however that the congress chose language different from the statutory language that had been construed in earlier cases this strongly suggests that the congress intended a meaning different from the older statutory language but it does not clearly indicate what the congress intended that difference to be it is in this setting that we reach the treasury regulations-- sec_1_163-8t temporary income_tax regs fed reg date and sec_1_163-9t a temporary income_tax regs fed reg date that is sec_163 provides that the term ‘personal interest’ means emphasis added compare sec_64 and sec_65 the term includes emphasis added sec_6232 of the technical_and_miscellaneous_revenue_act_of_1988 tamra publaw_100_647 102_stat_3342 added subsection e to sec_7805 sec_7805 provides that any temporary_regulation shall expire within years after the date_of_issuance of such regulation sec_7805 applies to any temporary_regulation issued after nov continued -- - it is accepted that these regulations if not invalid would result in our concluding that interest on petitioners’ underpayment of federal income taxes is nondeductible personal_interest we conclude that taking into account the uncertainty as to the meaning of the statute even as informed by the history of the legislation these regulations constitute a permissible interpretation of the statute as a result the regulations are not invalid and so petitioners’ claimed interest_expense_deduction is not allowed under chapter cc caselaw setting of the issues we first addressed the validity of sec_1_163-8t temporary income_tax regs fed reg date and sec_1_163-9t a temporary income_tax regs fed reg date in 106_tc_31 at that time the court_of_appeals for the bighth circuit was the only court_of_appeals that had addressed the issue and it concluded that sec_1_163-9t a temporary income_tax regs supra is not invalid 65_f3d_687 8th cir with all due respect to the court_of_appeals for the eighth circuit we concluded in redlark v commissioner t c pincite that continued tamra sec_6232 sec_102 stat pincite the regulations herein involved were issued before date and thus the sunset provision of sec_7805 does not apply to these regulations both sec_1_163-8t temporary income_tax regs supra and sec_1_163-9t a temporary income_tax regs supra as applied to the facts presented in redlark were unreasonable relying on redlark v commissioner supra we held in kikalos v commissioner tcmemo_1998_92 that the interest on the income_tax deficiencies resulting from the operation of the taxpayer- husband’s unincorporated trade_or_business was deductible under sec_163 h a because the interest was properly allocable to the taxpayer-husband’s unincorporated trade_or_business the courts of appeals for the ninth and seventh circuits reversed our decisions in redlark v commissioner supra and kikalos v commissioner supra respectively and held that sec_1_163-9t a temporary income_tax regs supra is a reasonable interpretation of sec_163 190_f3d_791 7th cir revg tcmemo_1998_92 141_f3d_936 9th cir revg and remanding 106_tc_31 the courts of appeals for the fourth and sixth circuits also reached the same conclusion 180_f3d_721 6th cir 173_f3d_533 4th cir ’ although the courts of appeals for the fourth and seventh circuits noted the application of sec_1_163-8t temporary income_tax regs fed reg date 173_f3d_533 4th cir kikalos v continued -- the courts of appeals uniformly relied on the following rationale to support their conclusions that sec_1 9t b a temporary income_tax regs supra is not invalid the regulation is not inconsistent with either the statute or its legislative_history and the regulation is supported by the staff of the joint_committee on taxation general explanation of the tax_reform_act_of_1986 j comm print hereinafter referred to as the blue_book kikalos v commissioner f 3d pincite mcdonnell v united_states f 3d pincite adopting the rationale of redlark v commissioner f 3d pincite allen v united_states f 3d pincite redlark v commissioner f 3d pincite miller v united_states f 3d pincite although the judicial landscape surrounding sec_163 h a has changed significantly since our decisions in redlark v commissioner supra and kikalos v commissioner supra the legislative landscape has not since sec_1 9t b a temporary income_tax regs supra was published in the federal_register congress has not amended sec_163 h a so as to compel a construction of sec_163 h a contrary to the secretary’s construction as embodied continued commissioner 190_f3d_791 7th cir revg t c memo none of the cited court_of_appeals opinions specifically discussed the validity of this regulation - - in sec_1_163-9t a temporary income_tax regs supra the courts of appeals for the fourth seventh and bighth circuits pointed to congress’s failure to amend sec_163 h a as additional evidence that the regulation is reasonable kikalos v commissioner f 3d pincite 7th cir allen v united_states f 3d pincite 4th cir miller v united_states f 3d pincite 8th cir we have considered the opinions of the courts of appeals for the fourth sixth seventh highth and ninth circuits those opinions are entitled to all due respect 99_tc_490 appeal in the instant case however lies to the court_of_appeals for the fifth circuit which has yet to address the issue presented herein in 99_tc_490 we stated that in 54_tc_742 affd 445_f2d_985 10th cir we reasoned that where a reversal would appear inevitable due to the clearly established position of the court_of_appeals to which an appeal would lie our obligation as a national court does not require a futile and wasteful insistence on our view it should be emphasized that the logic behind the golsen doctrine is not that we lack the authority to render a decision inconsistent with any court_of_appeals including the one to which an appeal would lie but that it would be futile and wasteful to do so where we would surely be reversed accordingly bearing in mind our obligation as a national court see lawrence v commissioner t c continued accordingly we proceed to reconsider our opinions in redlark v commissioner supra and kikalos v commissioner supra we set forth the pertinent provisions of sec_163 we then trace the history of the enactment of these provisions from executive branch proposals through the legislative process of the tax_reform_act_of_1986 h_r the ways and means committee’s clean bill and the retroactive amendments enacted in the technical_and_miscellaneous_revenue_act_of_1988 tamra we then evaluate the status of the regulations d the statute sec_163 provides for the deductibility of all interest_paid or accrued in the taxable_year on indebtedness the other subsections of sec_163 provide limitations particularized rules or definitions with regard to the allowance continued revd on other grounds 258_f2d_562 9th cir we should be careful to apply the golsen doctrine only under circumstances where the holding of the court_of_appeals is squarely on point see golsen v commissioner supra pincite two district courts in the fifth circuit have concluded that sec_1_163-9t a temporary income_tax regs fed reg date is not invalid fitzmaurice v united_states aftr 2d ustc par big_number s d tex 71_fsupp2d_622 w d tex although these opinions are relevant to the instant case they do not control because they are not court_of_appeals opinions -- - rule_of subsection a as applicable to the year before us sec_163 provides in pertinent part as follows sec_163 interest h disallowance of deduction for personal_interest -- in general --in the case of a taxpayer other than a corporation no deduction shall be allowed under this chapter chapter relating to normal taxes and surtaxes for personal_interest paid_or_accrued during the taxable_year personal_interest --for purposes of this subsection the term personal_interest means any interest allowable as a deduction under this chapter other than-- a interest_paid or accrued on indebtedness properly allocable to a trade_or_business other than the trade_or_business of performing services as an employee b any investment_interest within the meaning of subsection d c any interest which is taken into account under sec_469 in computing income or loss from a passive_activity of the taxpayer d any gualified residence interest within the meaning of paragraph and eb any interest payable under sec_6601 on any unpaid portion of the tax imposed by sec_2001 for the period during which an extension of time for payment of such tax is in effect under sec_6163 or sec_6166 or under sec_6166a as in effect before its repeal by the economic_recovery_tax_act_of_1981 petitioners contend that the interest they paid in respect of their income_tax underpayment falls within the terms of -- - sec_163 h a they do not contend that their interest payment falls within the terms of any of the other subparagraphs of sec_163 accordingly we focus on sec_163 h a eb history of the legislation see appendix infra in date the treasury_department issued a report to the president recommending numerous revisions of the tax laws one of the proposals was designed to curtail the subsidy implicit in the then current law deduction of interest on debt to finance large amounts of passive tax-preferred investment_assets such as corporate stock or extraordinary consumption expenditures such as second homes in date president reagan issued a report which included a proposal to subject all interest not incurred in connection with a trade_or_business to the sec_163 limitations on investment_interest the house bill followed the president’s proposal in that it would impose a limit on deductibility of nonbusiness interest the latter term was defined to exclude any interest which is allowable as a deduction in computing adjusted_gross_income the ways_and_means_committee report stated that interest_expense that is paid_or_incurred in carrying_on_a_trade_or_business is not subject_to the interest_deduction limitation under the bill h rept pincite 1986_3_cb_1 the senate amendment separated out the investment_interest provisions in a revised sec_163 and provided a prohibition new sec_163 on deducting consumer interest the latter term was defined to exclude interest_paid or accrued on indebtedness incurred or continued in connection with the conduct_of_a_trade_or_business the conference committee reached its agreement on date thirteen days later the staff of the joint_committee on taxation published a summary of the agreement hereinafter sometimes referred to as the joint_committee staff summary twenty days after that the conference committee published its report thirty-four days after that the tax_reform_act_of_1986 was enacted the conference committee generally followed the senate’s approach but changed the language to prohibit any deduction for personal_interest for our purposes personal_interest was defined the same way the senate bill defined consumer interest the joint_committee staff summary stated as follows interest on underpayments of tax other than certain deferred estate_taxes is treated as personal_interest under the provision the conference committee explanation includes the following sentence personal_interest also generally includes interest on tax deficiencies -- - on date the staff of the joint_committee on taxation published its blue_book which included the following personal_interest also includes interest on underpayments of individual federal state or local_income_taxes notwithstanding that all or a portion of the income may have arisen in a trade_or_business xk kek on date the chairman and ranking minority member of each of the tax-writing committees introduced bills to make technical corrections to tra each bill included the following subparagraph a of sec_163 of the 1986_code is amended by striking out incurred or continued in connection with the conduct of and inserting in lieu thereof properly allocable to sec_105 of h_r and s bach bill provided that the change was to take effect as though it had been included in tra the ways_and_means_committee report stated that the change in sec_163 h a is intended to make it consistent with the language of sec_469 which also had been enacted in tra the house of representatives passed the provision as part of the budget reconciliation act the finance_committee approved the same language and described it the same way in its report for reasons unrelated to this provision the technical corrections were dropped from the omnibus budget reconciliation act of publaw_100_203 101_stat_1330 the same provisions were then introduced as part of the technical correction act of with the same effective dates and explanations and ultimately enacted without change by the technical_and_miscellaneous_revenue_act_of_1988 tamra publaw_100_647 102_stat_3342 the language thus enacted is what we must construe in the instant case f analysis of the statute from the foregoing we draw the following conclusions initial objectives although the movement to enact what became sec_163 h may have started with a concern about subsidizing already-tax- favored investments and extraordinary consumption expenditures such as second homes infra appendix the treasury report the enacted statute is different---narrower in some respects and broader in others----from the original announced objectives it is not at all unusual for the congress to act outside the confines of the problem described in the legislative_history the congress has done so in many different areas of the tax law see eg bartels trust for ben of univ v united_states 209_f3d_147 2d cir relating to charities’ unrelated_trade_or_business income 633_f2d_114 8th cir relating to the definition of public_utility_property for investment_credit purposes warrensburg board paper corp v commissioner - - t c relating to subchapter sdollar_figurecorporations’ one-shot elections 47_tc_269 relating to includability of the value of certain annuities in decedents’ estates where the congress has chosen to so legislate the courts do not confine the statute to the original problem but rather apply the statute to the net that the congress has chosen to cast in light of the evolution of sec_163 over the years from the treasury report to tamra the original objective of the proposal cannot be taken as sufficiently explaining the meaning of sec_163 h a the varying handles definition in the statute when the congress enacts a definition of a term the statutory definition controls over definitions in general dictionaries a review of the relevant history of the legislation reveals the varying phraseology that the congress employed in the legislative process that culminated in the enactment of sec_163 five different terms or handles were used to describe the interest the deductions in respect of which the congress wanted to either limit or disallow nonbusiness interest nonbusiness consumer interest consumer interest personal consumer interest and personal_interest the - congress also used varying definitions for these terms eg interest_expense that is paid_or_incurred in carrying_on_a_trade_or_business h rept pincite 1986_3_cb_1 interest_paid or accrued on indebtedness incurred or continued in connection with-- the conduct_of_a_trade_or_business h_r sec as passed by the senate cong rec at s date we make these observations because of the apparent focus on the question of whether interest_paid in respect of an individual’s federal_income_tax liability is a personal obligation see miller v united_states f 3d pincite stating that an individual’s income_tax_liability regardless of the nature of the income giving rise to the liability isa personal obligation and that consequently interest owed by such individual because of a failure to pay his tax obligation on time necessarily is also a personal obligation see also kikalos v commissioner f 3d pincite describing as reasonable the view taken by the secretary therein that interest on income_tax deficiencies is personal_interest because the obligation to pay income_tax is personal allen v united_states f 3d pincite stating pursuant to these allocation rules deficiency_interest is allocable to the payment of income taxes an expenditure that is purely personal in nature redlark v commissioner f 3d pincite agreeing with the statement of the court_of_appeals for the bighth circuit miller -- - that personal income_tax obligations are always essentially personal in nature despite whatever logical conclusions may flow from the congress’s use of the term personal_interest and the congress’s clearly expressed intention to end the deduction for indebtedness incurred to finance personal consumption expenditures the instant case does not turn on whether the obligation to pay deficiency_interest is a personal obligation or whether the payment of federal individual income_tax is a personal consumption expenditure indeed the obligation to pay home mortgage interest is undoubtedly a personal obligation yet that type of interest_expense is excluded from the definition of personal_interest sec_163 d moreover as we noted in redlark v commissioner t c pincite to conclude that an income_tax deficiency is ipso facto a consumption expenditure begs the issue accordingly the determination whether an item of interest is either a personal obligation or a personal consumption expenditure is not the talisman for purposes of applying sec_163 rather the controlling inquiry as framed by the statute itself is whether the interest in issue is properly allocable to a trade_or_business sec_163 a when as in the instant case the congress undertakes to define a term explicitly we must follow that definition even if it varies from that term’s ordinary meaning 530_us_914 guerrero-perez v ins - - f 3d 7th cir see eg 89_tc_986 in other words we are to disregard the connotations of the term or handle that the congress adopts and instead focus on the language that the congress actually used to define the term this is especially true where as in the instant case the congress tells us what the term in question means as a rule ‘a definition which declares what a term ‘means’ excludes any meaning that is not stated ’ 439_us_379 ndollar_figure if however the statute in question uses the word includes rather than means to define a term then there is an indication that the definition of the term is exemplary rather than exclusive sec_7701 see 724_f2d_823 9th cir citing 576_f2d_1285 8th cir in cherin v commissioner t c pincite1 we addressed inter alia whether the taxpayer’s deficiencies were subject_to a higher rate of interest under what was then as to interest accruing after date sec_6621’ dealing with interest on a substantial_underpayment attributable to a tax-motivated transaction we found as facts in cherin v sec_6621 later was repealed by sec b of the omnibus budget reconciliation act of publaw_101_239 103_stat_2106 -- - commissioner t c pincite that the taxpayer was looking for an investment which would produce significant income for his retirement years reasonably relied on the advice of his accountant financial adviser and attorney to enter into the disputed transaction a tax_shelter involving cattle breeding and contemplated that he would recover the purchase_price of the two herds in which he invested despite these findings which suggested the presence of a profit_motive we concluded that the taxpayer’s deficiencies were subject_to the higher rate of interest under sec_6621 ie that the taxpayer had a substantial_underpayment attributable to a tax-motivated transaction cherin v commissioner t c pincite we reached our conclusion in cherin even though the handle the congress chose tax-motivated transaction suggested the importance of the taxpayer’s motives instead of focusing on the connotations that logically flowed from that handle we focused on the relevant statutory language which set forth what the term tax-motivated transaction means sec_6621 in the instant case in restricting the allowance rule_of sec_163 the congress chose the term personal_interest and the congress told us what that term means in sec_163 as relevant herein the term personal_interest means any interest allowable as a deduction under this chapter other than-- interest_paid or accrued on indebtedness - - properly allocable to a trade_or_business other than the trade_or_business of performing services as an employee sec_163 h a based on this definition of personal_interest that the congress set forth the appropriate inquiry in the instant case is not whether petitioners’ interest on their income_tax deficiency is personal but whether it is properly allocable to a trade_or_business the pre-tra cases in redlark v commissioner t c pincite we opened our discussion of the law as it stood before enactment of tra as follows the question remains however whether the elements giving rise to the deficiencies to which the interest herein relates are of such a nature as to permit such interest to constitute a business_expense within the meaning of sec_162 and therefore of sec_62 and as a result be characterized as interest on indebtedness properly allocable to a trade_or_business within the meaning of sec_163 a in the event that the temporary_regulation is not applicable we think a review of the cases decided prior to the enactment of sec_163 h a in respect of the deductibility of interest on income_tax deficiencies as a business_expense will throw light on this question and is therefore a significant element in our analysis of the impact of that section on petitioners’ claimed interest_deduction it is to that review that we first turn our attention sec_163 a was amended by sec c of the technical_and_miscellaneous_revenue_act_of_1988 publaw_100_647 102_stat_3342 sec_163 a as originally enacted in provided - - a interest_paid or accrued on indebtedness incurred or continued in connection with the conduct_of_a_trade_or_business other than the trade_or_business of performing services as an employee tax_reform_act_of_1986 publaw_99_514 100_stat_2085 the amended language effective for the years in issue was intended to conform the definition of personal_interest to the language of the related passive loss and investment_interest_limitation provisions to permit consistent application of a standard for allocation of interest see s rept pincite h rept pincite there is no indication that the change in language was intended to make any substantive change in the meaning of the statutory language we then analyzed three opinions 28_tc_789 affd 259_f2d_450 4th cir 31_tc_412 affd 276_f2d_601 10th cir 35_tc_571 affd 299_f2d_380 7th cir in each of these opinions we held that the interest on a tax underpayment was an ordinary_and_necessary_expense paid_or_incurred during the taxable_year in carrying on any trade_or_business within the meaning of sec_23 a i r c the predecessor of sec_162 in standing v commissioner t c pincite we also held that the interest on a tax underpayment was attributable to the taxpayer’s trade_or_business within the meaning of sec_22 i r c the predecessor of sec_62 hence deductible in arriving at adjusted_gross_income in polk v commissioner t c pincite we noted that the net_operating_loss language in sec_122 d i r c the predecessor of sec_172 was -- p7 - identical to the sec_22 i r c language construed in standing and so should have the same meaning as in standing in reise v commissioner t c pincite we noted that neither standing nor polk discussed our earlier opinion in 22_tc_1370 in which we had held that interest on a tax underpayment was not attributable to the taxpayer’s trade_or_business within the meaning of sec_122 d i r c in reise we thereupon overruled aaron and reaffirmed the position we took in polk that the interest on the tax underpayment was attributable to the taxpayer’s trade_or_business in redlark v commissioner t c pincite we then summarized the effect of the foregoing cases as follows concededly there is some confusion in the reasoning of the decided cases but the thrust of their bottomline conclusions is clear exceptions will be accorded to the ordinary and necessary provision of sec_162 only when there is explicit legislative indication that such a result was intended thus we agree with petitioners that there is a consistent body of pre- sec_163 case law holding that at least under limited circumstances such as were involved in standing v commissioner supra polk v commissioner supra and reise v commissioner supra deficiency_interest is a deductible business_expense under sec_162 and therefore under sec_62 see brennan megaard deducting interest on noncorporate trade_or_business tax deficiencies uncertainty exists under the new temporary regulations rev of taxn of individual sec_22 later in our opinion in redlark v commissioner t c pincite we pointed out that - - we have consistently been reluctant to conclude that congress overruled existing case law when the statutory language does not compel such a conclusion and congress has not otherwise expressly indicated that such a result should ensue as we noted supra in h_r as reported by the ways_and_means_committee nonbusiness interest was defined to exclude any interest which is allowable as a deduction in computing adjusted_gross_income proposed amendment to sec_163 b in sec_402 of h_r as reported by the ways_and_means_committee if that language had been enacted then our redlark analysis of the statute would properly have led to the conclusion that interest on a tax underpayment under the circumstances of redlark and the instant case would continue to be deductible under sec_162 and that sec_163 would not affect that deductibility and that regulations to the contrary would be contrary to the statute however that language was not enacted see infra appendix instead in tra the congress defined personal_interest to exclude interest_paid or accrued on indebtedness incurred or continued in connection with the conduct_of_a_trade_or_business sec_163 a emphasis added in tamra the congress changed the language so as to exclude from personal_interest interest_paid or accrued on indebtedness properly allocable to a trade_or_business sec_163 a emphasis added in standing polk and reise the critical statutory - language was in carrying on any trade_or_business sec_23 a i r c and attributable to the taxpayer’s trade_or_business sec_22 and d i r c in redlark v commissioner t c pincite we did not deal with the fact that both the enacted tra language in connection with and the enacted tamra language properly allocable to were different from the in carrying on and attributable to language interpreted in the pre-tra opinions ordinarily we would expect that a change in statutory language indicates a change in meaning 464_us_16 cf 118_tc_226 and cases there cited this is the general_rule not only because of the authority of the cited opinions but also because this is the way legislative drafters are instructed to draft statutes see eg office of the legislative counsel u s house of representatives house legislative counsel’s manual on drafting style as follows use same word over and over --if you have found the right word don’t be afraid to use it again and again in other words don’t show your pedantry by an ostentatious parade of synonyms your english teacher may be disappointed but the courts and others who are straining to find your meaning will bless you avoid utragquistic subterfuges ----do not use the same word in different ways in the same draft unless continued - - application of this general_rule if the statutory language is different then it is presumed that the meaning is different to the matter before us leads to the conclusion that sec_163 h a means something different from the statutory provisions interpreted in the pre-tra opinions 1’ continued you give the reader clear warning to the same effect see dickerson the interpretation and application of statute sec_224 quoted in 77_tc_428 ndollar_figure as follows see r dickerson the interpretation and application of statute sec_224 as follows because legal documents are for the most part nonemotive it is presumed that the author’s language has been used not for its artistic or emotional effect but for its ability to convey ideas accordingly it is presumed that the author has not varied his terminology unless he has changed his meaning and has not changed his meaning unless he has varied his terminology that is that he has committed neither elegant variation nor utraquistic subterfuge this is the rebuttable_presumption of formal consistency fn refs omitted see also hirsch drafting federal_law sec_5 3d ed ‘t this presumption is rebuttable in the tamra amendments at every step in the enactment of the change from incurred or continued in connection with the conduct of to properly allocable to the congress stated the intention that this was done to effectuate more clearly the original intention of tra and not to change the meaning of the statute see infra appendix consistent with these statements of congressional intent the tamra amendments took effect as if included in the provision of the tra to which the tamra amendments relate see also redlark v commissioner t c pincite n however the parties have not directed our attention to and we have not found any evidence that either the continued --- - we do not intend in the instant case to overrule any of the three pre-tra opinions---standing polk or reise the statutory terms construed in those cases have been carried forward from the internal_revenue_code_of_1939 and now appear in sec_162 paid_or_incurred in carrying on any trade_or_business sec_62 attributable to a trade_or_business carried on by the taxpayer and sec_172 d attributable to a taxpayer’s trade_or_business however the result of the congress’s decisions to use different language in sec_163 a and to provide in sec_163 that the disallowance rule overrode everything else in chapter is that as to the issue we cited them for in redlark the pre-tra opinions have become irrelevant to the determination of chapter tax_liabilities the conference_report the blue_book in redlark v commissioner t c pincite we discussed the following sentence from the tra conference committee explanation-- personal_interest also generally includes interest on tax deficiencies --with special focus on generally and tax deficiencies we noted that deficiency is a term of art with a settled continued enacted tra language or the enacted tamra language was intended to have the same meaning as the language interpreted in the pre-tra opinions - - definition we interpreted the conference committee sentence as follows t c pincite in short we think that when the conference committee used the phrase tax deficiencies it was referring to amounts due by way of income estate_and_gift_taxes in this context the word generally in the conference committee report takes on a significant meaning it signals that not all interest relating to income_tax etc deficiencies are included in personal_interest the logical explanation for what is excluded by generally is such interest that constitutes an ordinary and necessary business_expense and is therefore allocable to an indebtedness of a trade_or_business within the meaning of the exception clause of sec_163 a to adopt respondent’s position would require us to substitute the word always for generally and to expand the interpretation of the word deficiencies beyond its accepted meaning to encompass taxes other than income etc taxes in order to account for_the_use_of the word generally by way of contrast our interpretation accepts the established meaning of deficiencies and gives effect to generally without modification we then discussed the blue book’s status and concluded as follows t c pincite where there is no corroboration in the actual legislative_history we shall not hesitate to disregard the general explanation as far as congressional intent is concerned ’ see 965_f2d_1038 ndollar_figure 11th cir affg 95_tc_525 89_tc_357 affd 883_f2d_1350 7th cir see also livingston supra pincite the blue_book is on especially weak ground when it adopts anti-taxpayer positions not taken in the committee reports given the clear thrust of the conference committee report the general explanation is without foundation and must fall by the wayside to conclude other- wise would elevate it to a status and accord it a deference to which it is simply not entitled ’ in this connection we also note that the tax_reform_act_of_1986 publaw_99_514 100_stat_2085 was enacted on date during the 99th congress whereas the general - - explanation was published on date during the 100th congress thus the general explanation is not even entitled to the respect it might otherwise be accorded if it had been prepared for the congress which enacted sec_163 h see also lawson v commissioner tcmemo_1994_286 we conclude that there are several difficulties with the foregoing analysis in our opinion in redlark v commissioner t c pincite for the following reasons we would not agree that the conference committee explanation has a clear thrust firstly interest ordinarily is imposed on underpayments or overpayments not on deficiencies see eg sec_6601 sec_6611 sec_6621 there can be an income_tax deficiency without an underpayment ’ there can be an underpayment without an income_tax deficiency ’ in describing the amendments made by tra sections to sec_6621 i r c and to sec_6601 i r c the joint statement of managers portion of the conference committee report consistently refers to interest on underpayments or overpayments of tax and it does not refer to interest on tax deficiencies h conf rept at ii-784 to ii-785 c b vol pincite see eg lundy v commissioner tcmemo_1993_278 revd 45_f3d_856 4th cir revd 516_us_235 in which the parties agreed that the taxpayer had a dollar_figure deficiency even though the taxpayer’s withheld and not refunded income taxes exceeded his total_tax liability e g when a correct_tax return is filed but the payments are less than the correctly stated liabilities - -- thus it 1s not clear whether the term deficiency to which we attributed such significance in redlark v commissioner t cc pincite is merely an inadvertence in one portion of the conference committee report secondly the word generally may merely serve the function of alerting the reader that there is a category of interest on tax underpayments that does not fit into the definition of personal_interest --to wit the interest described in subparagraph ee of sec_163 as follows eb any interest payable under sec_6601 on any unpaid portion of the tax imposed by sec_2001 for the period during which an extension of time for payment of such tax is in effect under sec_6163 or sec_6166 joint_committee staff summary pincite thirdly the joint_committee staff summary published days before the conference_report described the provision as follows interest on underpayments of tax other than certain deferred estate_taxes is treated as personal_interest under the provision apart from the use of underpayments rather than deficiencies the joint_committee staff summary appears to be completely consistent with the conference committee sentence on which we focused in redlark v commissioner t c pincite--and quite inconsistent with the conclusion we drew in redlark ‘4 the reference to sec_6166 later was stricken by sec_503 b b of the taxpayer_relief_act_of_1997 publaw_105_34 111_stat_788 -- - fourthly even if we were to agree that the use of deficiencies in the conference committee sentence is significant the only significance stated in redlark v commissioner t c pincite is that it refers to amounts due mis by way of income estate_and_gift_taxes as we noted supra in secondly and thirdly the exclusion provided by subparagraph ez of sec_163 is an exclusion of interest on estate_tax in certain circumstances this is a far simpler explanation of the conference committee sentence than the labored explanation in redlark it provides consistency of meaning among the various documents in the history of the legislation and it refutes the conclusion in redlark v commissioner t c pincite that the conference committee sentence has a clear thrust that requires us to reject the tra blue_book and to invalidate treasury regulations of course if a blue_book were to conflict with enacted language or controlling legislative_history then the statutory language or the controlling legislative_history would prevail in our view the conference committee report is not clear regarding which category of interest was intended to be excepted from personal_interest e which category made it ' beginning with the tax reform act of publaw_91_ 83_stat_487 the congress began to bring a series of regulatory excise_taxes into the definition of deficiency in sec_6211 at the time tra was enacted the definition included the taxes imposed by chs through in addition to the income estate_and_gift_taxes imposed by subtits a and b - - necessary to qualify the statement about personal_interest with generally the blue_book identifies another possible category besides interest on a deficiency arising in the case of a sole_proprietorship which contributes to the conclusion that the controlling legislative history’s meaning is unclear conclusions from the statute and the history of the legislation the relevant statutory language is not the term personal_interest but the definitional term in subparagraph a of sec_163 in the context of the remaining elements of the definition that definitional term differs from the statutory language construed in the three pre-tra opinions relied on in redlark and so the meaning of that definitional term presumably is different from the meanings of the statutory language construed in those three opinions the relevant statutory language does not provide a clear answer to the dispute before us in the instant case the history of the legislation clearly shows an evolution in the congress’s thinking during the legislative process it provides some support for the validity of the treasury regulations but that support is rebuttable apart from the analysis in redlark that history does not provide support for the conclusion that the treasury regulations are invalid -- - in this relatively inconclusive setting we proceed to examine the treasury regulations g the regulations in the instant case we consider the validity of the following regulations sec_1_163-8t and c temporary income_tax regs fed reg date regs sec_1_163-8t and c ii temporary income_tax supra provides in pertinent part as follows sec_1_163-8t allocation of interest_expense among expenditures temporary a in general-- application this section prescribes rules for allocating interest_expense for purposes of applying sec_469 the passive loss limitation and d and h the nonbusiness interest limitations c allocation of debt and interest expense-- allocation in accordance with use of proceeds debt is allocated to expenditures in accordance with the use of the debt proceeds and debt proceeds and related interest_expense are allocated solely by reference to the use of such proceeds and the allocation is not affected by the use of an interest in any property to secure the repayment of such debt or interest allocation of debt proceeds not disbursed to borrower-- debt assumptions not involving cash disbursements if a taxpayer incurs or assumes a debt in consideration for the sale or use of property for services or for any other purpose or takes property subject_to a debt and no debt continued -- - and sec_1_163-9t a temporary income_tax regs fed reg date see redlark v 16’ continued proceeds are disbursed to the taxpayer the debt is treated for purposes of this section as if the taxpayer used an amount of the debt proceeds equal to the balance of the debt outstanding at such time to make an expenditure for such property services or other purpose ‘7 sec_1_163-9t i a temporary income_tax regs supra provides as follows sec_1_163-9t personal_interest temporary bo personal interest--- interest relating to taxes--- in general except as provided in paragraph b of this section personal_interest includes interest---- a paid on underpayments of individual federal state or local_income_taxes and on indebtedness used to pay such taxes within the meaning of sec_1 168-8t regardless of the source of the income generating the tax_liability example a an individual owns stock of an s_corporation on its return for the corporation underreports its taxable_income consequently a underreports a’s share of that income on a’s tax_return in a pays the resulting deficiency plus interest to the internal_revenue_service the interest_paid by a in on the tax_deficiency is personal_interest notwithstanding the fact that the additional tax_liability may have arisen out of income from a trade_or_business the result would be the same if a’s business had been operated as a sole_proprietorship continued -- -- commissioner t c pincite the continuing vitality of these temporary regulations standing sec_7805 sec_1_163-8t promulgated under the authority of see also temporary income_tax regs supra note regarding notwith- standards for judging validity of regulations supra was sec_469 and the basic regulation-prescribing authority for the treasury_department t d notice of proposed rulemaking the sec_1_163-8t temporary income interpretative_regulation 1987_2_cb_1053 for purposes of with the commissioner’s conclusion temporary income_tax regs supra regulation because the legislative continued given the interaction between temporary income_tax regs supra sec_1 168-8t reference to sec_1 168-8t sec_1_163-9t a temporary income_tax regs 9t b sec_1_163-8t 1987_2_cb_52 fed temporary income_tax regs temporary income_tax regs temporary income_tax regs a7 in the relevant commissioner concluded that tax regs supra is an reg date the instant case we agree and treat sec_1_163-8t as an interpretative delegation to the secretary to sec_1_163-8t and sec_1_163-9t and the fact that there is no it appears that the temporary income_tax regs supra in supra should be to sec_1_163-8t supra instead see sec_1 supra cross-referencing supra for rules determining the allocation of interest_expense to various activities c b sec_469 to this provision as sec a7 treasury_decision refers to sec that provision was redesignated as see appendix note k t d for convenience we refer - - prescribe regulations relates to sec_469 only sec_469 100_tc_293 sec_1_163-9t temporary income_tax regs supra was promulgated under sec_7805 t d 1988_1_cb_80 in the relevant notice of proposed rulemaking 1988_1_cb_926 the commissioner concluded that sec_1_163-9t temporary income_tax regs supra 1s an interpretative_regulation for purposes of the instant case we agree with the commissioner’s conclusion and treat sec_1_163-9t temporary income_tax regs supra as an interpretative_regulation although interpretative regulations are entitled to considerable weight they are accorded less deference than legislative regulations which are issued under a specific grant of authority to address a matter raised by the relevant statute 467_us_837 455_us_16 temporary regulations are accorded the same weight as final regulations peterson marital trust v commission102_tc_790 affd 78_f3d_795 2d cir an interpretative_regulation is to be upheld if it implement s the congressional mandate in some reasonable manner ’ united_states v vogel fertilizer co u s pincite quoting 389_us_299 in - al --- making this determination we employ the following analysis set forth by the supreme court under the formulation now familiar when we confront an expert administrator’s statutory exposition we inquire first whether the intent of congress is clear as to the precise question at issue 467_us_837 if so that is the end of the matter ibid but if the statute is silent or ambiguous with respect to the specific issue the guestion for the court is whether the agency’s answer is based on a permissible construction of the statute id pincite if the administrator’s reading fills a gap or defines a term in a way that is reasonable in light of the legislature’s revealed design we give the administrator’s judgment controlling weight id pincite 513_us_251 accordingly we must first consider the statute and determine whether sec_163 a is silent or ambiguous with respect to the issue before us if we conclude that it is then we must consider the secretary’s regulatory interpretation of sec_163 h a on this issue and determine whether that interpretation represents a permissible construction of the statute we address each of these considerations in turn silence or ambiguity as set forth supra the relevant inguiry in the instant case is whether petitioners’ interest on their income_tax underpayment is properly allocable to a trade_or_business we have concluded supra f conclusions from the statute and the history of the legislation that the statutory text does not on its face provide the answer to the question before us by - -- choosing to use a definition different from the statutory phrases we had earlier construed the congress apparently intended a meaning different from the meaning of those earlier statutory phrases but the statutory text does not reveal specifically what that difference is the history of the legislation provides some support for a specific answer but that support is rebuttable every court_of_appeals which has addressed the issue presented herein has reached the same conclusion that the statute is silent or ambiguous kikalos v commissioner f 3d pincite mcdonnell v united_states f 3d pincite allen v united_states f 3d pincite describing the term properly allocable as manifestly ambiguous redlark v commissioner f 3d pincite describing as untenable the assertion that the words ‘properly allocable’ unambiguously specify that interest on business-related personal income_tax deficiencies should be deductible miller v united_states f 3d pincite describing congress’s failure to define what constitutes business_interest as an implicit legislative delegation of authority to the commissioner to clarify whether income_tax deficiency_interest is ‘properly allocable to a trade_or_business ’ see also 211_f3d_488 9th cir stating the common and ordinary meaning’ of the statutory phrase ‘properly allocable to a trade or business’ is not at all plain - - we conclude that sec_163 a is silent or ambiguous we now proceed to the second prong of our analysis ie whether the regulations in issue are based on permissible constructions of sec_163 h a permissible construction to be valid a regulation need not be the only or even the best construction of the statute it purports to implement 523_us_382 see romann v commissioner 1t c the supreme court has stated that a reviewing court--- need not conclude that the agency construction was the only one it permissibly could have adopted to uphold the construction or even the reading the court would have reached if the question initially had arisen ina judicial proceeding chevron u s a v natural res def council u s pincite n rather the reviewing court need only conclude that the regulation is reasonable 499_us_554 citing 440_us_472 a regulation is reasonable if it harmonizes with the plain language origin and purpose of the statute it purports to implement united_states v vogel fertilizer co u s pincite national muffler dealers assn v united_states u s pincite a sec_1_163-8t temporary income_tax regs fed reg date sec_1_163-8t temporary income_tax regs supra provides the rules for the allocation of interest_expense for - purposes of sec_163 sec_163 and sec_469 sec_1 8t a temporary income_tax regs supra although the congress did not itself devise the allocation rules the congress clearly stated how it expected the allocation rules to operate the joint statement of managers portion of the conference committee report dealing with sec_469 states in pertinent part as follows h conf rept at ii-146 c b vol pincite expenses allocable to portfolio_income --the conference agreement provides that portfolio_income is reduced by the deductible expenses other than interest that are clearly and directly allocable to such income properly allocable_interest expense also reduces portfolio_income such deductions accordingly are not treated as attributable to a passive_activity the conferees anticipate that the treasury will issue regulations setting forth standards for appropriate allocation of expenses and interest under the passive loss rule the conferees anticipate that regulations providing guidance to taxpayers with respect to interest allocation will be issued by date these regulations should be consistent with the purpose of the passive_loss_rules to prevent sheltering of income from personal services and portfolio_income with passive losses moreover the regulations should attempt to avoid inconsistent allocation of interest deductions under different code provisions in the case of entities a proper method of allocation may include for example allocation of interest to portfolio_income on the basis of assets although there may be situations in which tracing is appropriate because of the integrated nature of the transactions involved because of the difficulty of recordkeeping that would be required were interest_expense of individuals allocated rather than traced it is anticipated that in the case of individuals interest_expense generally will be traced to the asset or activity which is purchased or carried by incurring or continuing the underlying indebtedness for example an interest_deduction that is disallowed under sec_265 or sec_291 should not be allowed capitalized or suspended under another provision the congress’s suggestion however specifically related to the allocation rules for sec_469 only the joint statement of managers portion of the conference committee report does not provide a similar prescription for allocating interest_expense for purposes of subsections d and h of sec_163 in tamra the congress amended subsections d and h of sec_163 to conform the relevant language thereof to the relevant language of sec_469 in order to achieve consistent application of a standard for allocation of interest among the related provisions of sec_163 sec_163 and sec_469 by conforming the language of subsections d and h to sec_163 to the relevant language of sec_469 the congress gave a clear indication that the tracing regime it contemplated for purposes of sec_469 is the allocation method that it also intended for subsections d and h of sec_163 see appendix pp an examination of sec_1_163-8t temporary income_tax regs supra shows that the secretary heeded the congress’s suggestion sec_1_163-8t temporary income_tax regs supra imposes the very tracing regime that the congress contemplated sec_1_163-8t temporary income_tax regs supra in sum the congress suggested the means by which to allocate interest_expense for purposes of sec_469 the -- - secretary followed that suggestion and the congress later amended the relevant language of sec_163 and sec_163 to conform to the relevant language of sec_469 in light of these circumstances we conclude that the tracing regime that sec_1_163-8t temporary income_tax regs supra imposes is a permissible construction of sec_163 h a in addition to providing rules for the allocation of interest_expense sec_1_163-8t temporary income_tax regs supra also provides rules for the treatment of interest_expense so allocated sec_1_163-8t a temporary income_tax regs supra provides that interest_expense allocated to a trade_or_business_expenditure as defined in paragraph b of this section is taken into account under sec_163 h a sec_163 a is the provision that petitioners contend applies to their payment of interest on their federal individual income_tax deficiency sec_1_163-8t temporary income_tax regs supra defines the term trade_or_business_expenditure to mean an expenditure other than a passive_activity_expenditure or an investment_expenditure in connection with the conduct of any trade_or_business other than the trade_or_business of performing services as an employee if an expenditure is not a trade_or_business_expenditure a passive_activity_expenditure or an investment_expenditure then sec_1_163-8t d temporary income_tax regs supra treats the a7 - expenditure as personal_interest for purposes of sec_163 sec_1_163-8t temporary income_tax regs supra as previously noted sec_1_163-8t temporary income_tax regs fed reg date allocates petitioners’ payment of interest on their federal individual income_tax underpayment to the satisfaction thereof the treatment of petitioners’ interest payment thus depends on whether the payment of one’s federal individual income_tax_liability is an expenditure that is in connection with the conduct of any trade_or_business while reasonable arguments may lie on either side of this issue the secretary has undertaken to resolve it in promulgating sec_1_163-9t temporary income_tax regs fed reg date and it is our charge not to resolve that issue ourselves but rather to determine whether there is any reasonable basis for the resolution embodied in the commissioner's regulation 434_us_528 see also 89_tc_134 we now turn our attention to that task b sec_1_163-9t a temporary income_tax regs fed req date as applied to the instant case sec_1 9t b a temporary income_tax regs supra treats petitioners’ payment of interest on their income_tax underpayment as nondeductible personal_interest the text of -- - sec_163 h a does not compel this result the relevant legislative_history however lends some support to this interpretation of the statute the joint_committee staff summary which we did not consider in redlark v commissioner supra provides in pertinent part as follows interest on underpayments of tax other than certain deferred estate_taxes is treated as personal_interest under the provision sec_163 joint_committee staff summary pincite under this view interest on underpayments of certain deferred estate_taxes is the only type of interest on underpayments of tax that is excluded from the definition of personal_interest this view supports sec_1_163-9t a temporary income_tax regs supra which includes interest_paid on underpayments of federal income taxes within the definition of personal_interest we acknowledge that the joint_committee staff summary is not the official legislative document for the conference committee’s decisions about tra that distinction is accorded the conference committee report joint_committee staff summary at xiii further by definition the joint_committee staff summary may not be a complete or thorough statement of the conference decisions summaries are designed to cover concisely the main points of the summarized topic and they may lack specific detail however the joint_committee staff summary was provided --- - to the members of the house and senate for their reference before congress enacted tra and consequently it is part of the history of the legislation see eg 94_tc_610 thus before the enactment of tra the members of congress had before them an interpretation of sec_163 that included within the definition of personal_interest interest on underpayments of income_tax although not as clearly expressed as in the joint_committee staff summary the relevant portions of the joint statement of managers portion of the conference committee report may be read to echo the views expressed in the joint_committee staff summary the relevant portions of the joint statement of managers portion of the conference committee report provide that personal_interest also generally includes interest on tax deficiencies and that personal_interest does not include interest payable on estate_tax deferred under sec_6163 or sec_6166 h conf rept at ii-154 supra c b vol pincite these portions of the joint statement of managers portion of the conference committee report may be read to support a view that interest on all tax underpayments other than interest in respect of estate_tax deferred under either sec_6163 or sec_6166 is to be treated as personal_interest although the joint statement of managers portion of the conference committee report does not speak as clearly to the -- - issue before us as the joint_committee staff summary does one may reasonably view these two pieces of legislative_history as being consistent with one another at the very least in light of the joint_committee staff summary and the validation of sec_1_163-9t a temporary income_tax regs supra by five courts of appeals an interpretation of the joint statement of managers portion of the conference committee report that includes income_tax deficiencies within the definition of personal_interest cannot be said to be clearly inconsistent with sec_163 a we so conclude we reached the opposite conclusion in redlark v commissioner t c pincite and we used that conclusion as the basis for disregarding the blue_book the blue_book provides in pertinent part as follows personal_interest also includes interest on underpayments of individual federal state or local_income_taxes notwithstanding that all or a portion of the income may have arisen in a trade_or_business because such taxes are not considered derived from the conduct_of_a_trade_or_business however personal_interest does not include interest payable on estate_tax deferred under sec_6163 or sec_6166 personal_interest does not include interest on taxes other than income taxes that are incurred in connection with a trade_or_business for the rule that taxes on net_income are not attributable toa trade_or_business see sec_1_62-1 relating to nondeductibility of state income taxes in computing adjusted_gross_income blue_book pincite -- - the above quoted portion of the blue_book clearly supports sec_1_163-9t a temporary income_tax regs supra in redlark v commissioner supra we did not assign any weight to the blue_book because we concluded that it conflicted with the joint statement of managers and with what we there believed to be relevant prior caselaw as we have explained supra that caselaw construed statutory language different from what we deal with herein also the blue_book 1s consistent with the joint_committee staff summary and we believe that the joint_committee staff summary is consistent with the joint statement of managers whether one views the legislative_history of sec_163 h as inconclusive or as consistent with sec_1 9t b a temporary income_tax regs supra the blue_book warrants consideration see fpc v memphis light gas water div 411_us_458 bank of clearwater v united_states cl_ct consideration of the blue_book where as here it does not conflict with the enacted statutory language and does not conflict with what we have referred to as the conference committee sentence supra f thirdly in combination with the joint_committee staff summary and the relevant portion of the joint statement of managers portion of the conference committee report points toward a conclusion that sec_1_163-9t a temporary income - tax regs supra is a permissible construction of sec_163 h a we so conclude we have concluded that sec_163 a is silent or ambiguous we have also concluded that sec_1_163-8t temporary income_tax regs supra and sec_1 9t b a temporary income_tax regs supra are permissible constructions of sec_163 a accordingly we also conclude that both regulations are not invalid to the extent that redlark v commissioner supra is inconsistent herewith we no longer follow that opinion h petitioners’ alternative contention alternatively petitioners contend that sec_1 9t b a temporary income_tax regs supra does not control because it relates to sec_163 a as enacted by tra not to sec_163 a as amended by tamra sec_163 a as amended by tamra is the provision which applies in the instant case respondent contends that sec_1_163-9t a temporary income_tax regs supra controls because the amendment to sec_163 a was not intended to make any substantive change to the statute we agree with respondent as we stated in redlark v commissioner t c pincite n the amended language effective for the years in issue was intended to conform the definition of personal_interest to the language of the related passive loss and investment_interest_limitation -- - provisions to permit consistent application of a standard for allocation of interest see s rept pincite h rept pincite there is no indication that the change in language was intended to make any substantive change in the meaning of the statutory language we hold for respondent on this issue decision will be entered for respondent reviewed by the court cohen whalen halpern beghe and marvel jj agree with the majority opinion gerber chiechi and gale jj concur foley j did not participate in consideration of this case -- -- appendix history of the legislation the treasury report in date the treasury_department issued a report to the president entitled tax reform for fairness simplicity and economic growth hereinafter sometimes referred to as the treasury report in the treasury report the treasury_department explained that under then-governing law all interest_expense was deductible either as a business or investment_expense or as an itemized_deduction the treasury report pincite to curtail the subsidy implicit in the then current law deduction for interest on debt to finance large amounts of passive tax-preferred investment_assets such as corporate stock or extraordinary consumption expenditures such as second homes the treasury_department proposed to limit the deductions individuals could claim for interest_expense to the sum of mortgage interest on the principal_residence of the taxpayer passive_investment_income including interest_income and dollar_figure per return id the president’s proposals in date president reagan issued a report entitled the president’s tax proposals to the congress for fairness growth and simplicity hereinafter sometimes referred to as the president’s proposals chapter dollar_figure of the president’s proposals addressed interest deductions and proposed to subject - -- inter alia all interest not incurred in connection with a trade_or_business to the then governing limitation on the deduction of investment_interest under sec_163 the president’s proposals pincite underlying this proposal was a concern that consumer interest defined as ie interest incurred to acquire personal assets such as a car or vacation home undermined the then existing limitations on investment_interest and interest incurred to acquire tax-exempt_bonds id pincite- the house bill subsection d of sec_163 in then-current law was entitled limitation on interest on investment indebtedness in sec_402 of h_r the ways_and_means_committee proposed to deal with several concerns by revising subsection d which would be reentitled limitation on nonbusiness interest the bill combined the different concerns into a single overall test as appears from proposed new paragraphs and of subsection d as follows sec_402 limitation on deduction for nonbusiness interest a general_rule ---subsection d of sec_163 relating to limitation on interest on investment indebtedness is amended to read as follows d limitation on nonbusiness interest -- in general --in the case of a taxpayer other than a corporation the amount allowed as a deduction under this chapter for nonbusiness interest for any taxable_year shall not exceed the sum of-- -- - a dollar_figure dollar_figure in the case of a joint_return plus b the net_investment_income for the taxable_year in the case of a_trust the amount specified in subparagraph a shall be zero nonbusiness interest ---for purposes of this subsection the term ‘nonbusiness interest’ means any interest allowable as a deduction under this chapter determined without regard to paragraph except that such term shall not include-- a any qualified_residence_interest and b any interest which is allowable as a deduction in computing adjusted_gross_income and which is not attributable to a limited_business_interest for purposes of the preceding sentence the term ‘interest’ includes any amount allowable as a deduction in connection with personal_property used in a short_sale the term limited_business_interest is defined in subsec d in terms of lack of active_participation in the business it apparently would not apply to edward’s law practice as to the prior law’s deductibility of interest in computing adjusted_gross_income see infra f pre-tra cases the ways_and_means_committee report to accompany h_r h rept 1986_3_cb_1 states in pertinent part as follows -- - b interest_deduction limitations sec_402 of the bill and sec_163 of the code present law in general under present law no limitation is imposed under sec_163 on the deductibility of either interest on indebtedness incurred to purchase or carry consumption goods e personal consumer interest or interest on indebtedness incurred in connection with the taxpayer’s trade_or_business h rept pincite supra c b vol pincite explanation of provision in general the bill expands the scope of the interest limitation and alters the calculation of the amount of the limitation under the bill all nonbussiness interest is subject_to the limitation on deductibility including consumer interest and certain interest that is not treated as investment_interest subject_to limitation under present law nonbusiness interest subject_to the limitation under the bill does not include interest on debt secured_by the taxpayer’s principal_residence to the extent of its fair_market_value and interest on debt secured_by a second residence of the taxpayer to the extent of its fair_market_value interest_expense that is paid_or_incurred in carrying_on_a_trade_or_business except for interest attributable to certain limited business interests not involving low-income_housing is not subject_to the interest_deduction limitation under the bill id pincite -- - interest subject_to the limitation under the bill interest subject_to the limitation is all interest on debt not incurred in connection with the taxpayer’s trade_or_business other than debt secured_by the taxpayer’s residences as described above thus interest subject_to limitation generally includes investment_interest subject_to the sec_163 limitation under present law and consumer interest such as interest_paid or incurred to purchase an automobile for personal_use id pincite the house of representatives passed h_r without amendment to sec_402 of h_r as reported by the ways_and_means_committee the senate’s amendment h_r was received in the senate on date and referred to the finance_committee section of h_r as reported by the finance_committee separated the above-noted considerations----investment interest and consumer interest section b of the finance committee’s amendment revised sec_163 but unlike the house-passed bill left that code provision as one dealing with investment_interest section a of the finance committee’s amendment proposed a new sec_163 which provided in pertinent part as follows sec limitations on deduction for nonbusiness interest a disallowance of deduction for consumer interest of individuals --- sec_163 relating to deduction for interest is amended by redesignating subsection h as subsection and by inserting after subsection g the following new subsection --- - h disallowance of deduction for consumer interest -- in general --in the case of a taxpayer other than a corporation no deduction shall be allowed under this chapter for consumer interest_paid or accrued during the taxable_year consumer interest --for purposes of this subsection-- a in general ---the term ‘consumer interest’ means any interest allowable as a deduction under this chapter other than interest_paid or accrued on indebtedness incurred or continued in connection with-- the conduct_of_a_trade_or_business other than the trade_or_business of performing services as an employee or 1i1 an activity described in sec_212 b exception for qualified_residence_interest ---the term ‘consumer interest’ shall not include any qualified_residence_interest the senate_finance_committee report provides in pertinent part as follows s rept pincite 1986_3_cb_1 g interest_deduction limitations sec of the bill and sec_163 and h of the code present law other interest under present law no limitation is imposed under sec_163 on the deductibility of interest on indebtedness incurred for other purposes eg to purchase or carry consumption goods interest on indebtedness incurred in connection with the taxpayer’s -- - trade_or_business is also not subject_to the sec_163 limitation under present law reasons for change nonbusiness consumer interest although the committee believes it would not be advisable to subject_to income_tax imputed rental income with respect to consumer durables owned by the taxpayer it does believe that it 1s appropriate and practical to address situations where consumer expenditures are financed by borrowing by phasing out the present deductibility of consumer interest the committee believes that it has eliminated from the present tax law a significant disincentive to saving explanation of provisions in general the bill expands the scope of the interest limitation and alters the calculation of the amount of the limitation under the bill all nonbussiness interest is subject_to the limitation on deductibility including consumer interest and certain interest that is not treated as investment_interest subject_to limitation under present law interest subject_to the limitation under the bill does not include interest on debt secured_by the taxpayer’s principal_residence to the extent of its fair_market_value and interest on debt secured_by a second residence of the taxpayer to the extent of its fair_market_value interest_expense that is paid_or_incurred in carrying_on_a_trade_or_business is not subject_to the interest_deduction limitation under the bill except for interest attributable to certain limited business interests in general under the bill consumer interest is not deductible and the deduction for investment_interest is limited to investment_income for the year -- - with an indefinite carryforward of disallowed investment_interest investment_interest_limitation interest subject_to the limitation ----under the bill interest subject_to the investment_interest_limitation is all interest other than consumer interest and qualified_residence_interest on debt not incurred in connection with the taxpayer’s trade_or_business consumer interest limitation under the bill consumer interest is not deductible consumer interest generally includes all interest not incurred or continued in connection with the conduct_of_a_trade_or_business other than the performance of services as an employee thus consumer interest includes for example interest on a loan to purchase an automobile for personal_use and credit card interest incurred for personal expenses in all material respects section of h_r as passed by the senate on date was identical to section of h_r as reported by the senate_finance_committee sec_1401 of the senate amendment as reported by the finance_committee proposed to add a new section sec_469 relating to limitations on losses and credits from passive activities neither the house bill nor the president’s proposals contained a corresponding provision h conf rept ii-137 1986_3_cb_137 joint_committee on taxation comparison of tax reform provisions of h_r as passed by the house and senate jcs-15-86 date sec_501 of the house-passed version of the bill did - - however propose to deny excess passsive activity losses for purposes of computing the amount of the alternative_minimum_taxable_income see tra sec_701 100_stat_2320 h rept pincite supra c b vol sec_1401 of the senate amendment to h_r as reported by the finance_committee provides in pertinent part as follows sec_469 limitations on losses and credits from passive activities h regulations ---the secretary shall prescribe such regulations as may be necessary or appropriate to carry out provisions of this section including regulations---- which specify what constitutes an activity or material_participation for purposes of this section which provide that certain items of gross_income will not be taken into account in determining income or loss from any activity and the treatment of expenses allocable to such income and if necessary to prevent avoidance of this section determining whether income gain_or_loss from a limited_partnership or other passive_activity is treated as described in subsection c the finance_committee report on h_r did not explain how the regulations promulgated under sec_469 were to allocate interest_expense s rept pincite supra c b vol pincite - - sec_1401 of the senate amendment to h_r was amended by a floor amendment and passed the amendment did not affect the above quoted language cong rec s s june joint_committee on taxation comparison of tax reform provisions of h_r as passed by the house and senate jcs-15-86 date the conference committee on date the staff of the joint_committee on taxation published a pamphlet hereinafter sometimes referred to as the joint_committee staff summary described as follows joint_committee staff summary at xiii this pamphlet’ provides a title-by-title summary of the principal provisions of h_r tax_reform_act_of_1986 as agreed to by the house-senate conferees on date as a general_rule this pamphlet does not describe agreements of the conferees not to adopt a particular provision that was only in the house-passed bill or only in the senate-passed bill 1i e agreements to retain present law on particular issues this pamphlet is provided for_the_use_of the members of the house and the senate the official legislative document on the conference decisions on h_r will be the conference_report on the bill including the statement of managers explaining the conference decisions ' this pamphlet may be cited as follows joint_committee on taxation summary of conference agreement on h_r tax reform act of jcs-16-86 date the joint_committee staff summary describes the relevant portion of the conference agreement as follows - -- c interest_deduction limitation no deduction is allowed for personal_interest such as interest on car loans or credit card balances for personal expenditures interest on underpayments of tax other than certain deferred estate_taxes is treated as personal_interest under the provision joint_committee summary pincite the conference committee report h conf rept supra c b vol was published on date sec_511 of the conference committee report corresponds to section of h_r as passed by the senate in large part sec_511 of the conference committee report tracks section a of h_r as passed by the senate sec_511 of the conference committee report presents a new sec_163 which provides in pertinent part as follows h disallowance of deduction for personal_interest --- in general --in the case of a taxpayer other than a corporation no deduction shall be allowed under this chapter for personal_interest paid_or_accrued during the taxable_year personal_interest --for purposes of this subsection the term personal_interest means any interest allowable as a deduction under this chapter other than-- a interest_paid or accrued on indebtedness incurred or continued in connection with the conduct_of_a_trade_or_business other than the trade_or_business of performing services as an employee b any investment_interest within the meaning of subsection d -- - c any interest which is taken into account under sec_469 in computing income or loss from a passive_activity of the taxpayer d any gualified residence interest within the meaning of paragraph and eb any interest payable under sec_6601 on any unpaid portion of the tax imposed by sec_2001 for the period during which an extension of time for payment of such tax is in effect under sec_6163 or sec_6166 h conf rept at i-171 the joint statement of managers portion of the conference committee report provides in pertinent part as follows house bill under the house bill the deduction for nonbusiness interest of noncorporate taxpayers is limited to dollar_figure dollar_figure for joint returns plus net_investment_income plus certain deductible expenditures in excess of rental income from net_lease_property nonbusiness interest means all interest not incurred in the taxpayer’s trade_or_business including the taxpayer’s share of interest of s_corporations in whose management he does not actively participate the taxpayer’s share of interest_expense of limited_partnerships in which he is a limited_partner and the taxpayer’s share of interest_expense of certain trusts and other entities in which he is a limited_entrepreneur senate amendment the senate amendment provides that the deduction for investment_interest of noncorporate taxpayers is limited to net_investment_income plus certain deductible expenditures in excess of rental income from net_lease_property consumer interest is not deductible_interest on debt secured_by the taxpayer’s principal_residence and a second -- - residence of the taxpayer to the extent of their fair market values is not subject_to limitation consumer interest means interest not attributable to a trade_or_business other than the trade_or_business of performing services as an employee or to an activity engaged in for profit conference agreement the conference agreement follows the senate amendment with modifications and clarifications personal_interest the conference agreement follows the senate amendment provision with respect to consumer interest denominated personal_interest under the conference agreement with modifications and clarifications under the conference agreement personal_interest is not deductible personal_interest is any interest other than interest incurred or continued in connection with the conduct_of_a_trade_or_business other than the trade_or_business of performing services as a employee investment_interest or interest taken into account in computing the taxpayer’s income or loss from passive activities for the year personal_interest also generally includes interest on tax deficiencies personal_interest does not include qualified_residence_interest of the taxpayer nor does it include interest payable on estate_tax deferred under sec_6163 or sec_6166 h conf rept at ii-151 to ii-154 supra c b vol pincite in all material respects sec_511 as reported by the conference committee was identical to sec_511 of h_r as ultimately enacted on date tra sec_5l1l b publaw_99_514 100_stat_2085 - the conference agreement on h_r generally follows sec_1401 of the senate amendment relating to limitations on losses and credits from passive activities but with certain modifications and clarifications h conf rept at ii- supra c b vol pincite as modified clarified and enacted sec_469 provides in pertinent part as follows sec_469 passive_activity_losses and credits limited kk regulations ---the secretary shall prescribe such regulations as may be necessary or appropriate to carry out provisions of this section including regulations---- which provide for the determination of the allocation of interest_expense for purposes of this section '1 tra sec_501 publaw_99_514 100_stat_2085 the joint statement of managers portion of the conference committee report explaining interest_expense allocation under sec_469 provides--- expenses allocable to portfolio_income ---the conference agreement provides that portfolio_income is reduced by the deductible expenses other than interest that are clearly and directly allocable to such income properly allocable_interest expense also reduces portfolio_income such deductions accordingly are not treated as attributable to a passive_activity the conferees anticipate that the treasury will issue regulations setting forth standards for ' sec a of the omnibus budget reconciliation act of publaw_100_203 101_stat_1330 redesignated sec_469 as sec_469 -- - appropriate allocation of expenses and interest under the passive loss rule the conferees anticipate that regulations providing guidance to taxpayers with respect to interest allocation will be issued by date these regulations should be consistent with the purpose of the passive_loss_rules to prevent sheltering of income from personal services and portfolio_income with passive losses moreover the regulations should attempt to avoid inconsistent allocation of interest deductions under different code provisions ’ in the case of entities a proper method of allocation may include for example allocation of interest to portfolio_income on the basis of assets although there may be situations in which tracing is appropriate because of the integrated nature of the transactions involved because of the difficulty of recordkeeping that would be required were interest_expense of individuals allocated rather than traced it is anticipated that in the case of individuals interest_expense generally will be traced to the asset or activity which is purchased or carried by incurring or continuing the underlying indebtedness for example an interest_deduction that is disallowed under sec_265 relating to expenses and interest relating to tax-exempt_income or relating to special rules relating to corporate preference items should not be allowed capitalized or suspended under another provision h conf rept at ii-146 supra c b vol pincite blue_book on date the staff of the joint_committee on taxation published its general explanation of the tax_reform_act_of_1986 blue_book which states in pertinent part as follows pp c interest_deduction limitations sec_511 of the act and sec_163 and h of the code -- - prior_law other interest under prior_law no limitation was imposed under sec_163 on the deductibility of interest on indebtedness incurred for other purposes eg to purchase or carry consumption goods under prior and present law interest on indebtedness incurred in connection with the taxpayer’s trade_or_business is also not subject_to the limitation on the deductibility of interest_expense under sec_163 reasons for change personal_interest prior_law excluded or mismeasured income arising from the ownership of housing and other consumer durables investment in such goods allowed consumers to avoid the tax that would apply if funds were invested in assets producing taxable_income and to avoid the cost of renting these items a cost which would not be deductible in computing tax_liability thus the tax system under prior_law provided an incentive to invest in consumer durables rather than assets which produce taxable_income and therefore an incentive to consume rather than save explanation of provisions in general in general under the act personal_interest is not deductible and the deduction for investment_interest is limited to investment_income for the year with an indefinite carryforward of disallowed investment_interest the personal_interest limitation does not apply to interest on debt secured_by the taxpayer’s principal_residence to the extent of its basis plus the amount of such debt used to pay certain educational or medical_expenses and interest on debt secured_by a second residence of the taxpayer to the -- jo - extent of its basis plus the amount of such debt used to pay certain educational or medical_expenses provided the total amount of such debt does not exceed the fair_market_value of such residence personal_interest under the act personal_interest is not deductible personal_interest is any interest other than interest incurred or continued in connection with the conduct_of_a_trade_or_business other than the trade_or_business of performing services as an employee investment_interest or interest taken into account of computing the taxpayer’s income or loss from passive activities for the year thus personal_interest includes for example interest on a loan to purchase an automobile interest ona loan to purchase a life_insurance_policy and credit card interest where such interest is not incurred or continued in connection with the conduct_of_a_trade_or_business personal_interest also includes interest on underpayments of individual federal state or local_income_taxes notwithstanding that all or a portion of the income may have arisen in a trade_or_business because such taxes are not considered derived from the conduct_of_a_trade_or_business however personal_interest does not include interest payable on estate_tax deferred under sec_6163 or sec_6166 personal_interest does not include qualified_residence_interest of the taxpayer as discussed below for legislative background of the provision see h_r as reported by the house_committee_on_ways_and_means on date sec_402 h rep pp h_r as reported by the senate committee on finance on date sec s rep pp and h rep vol ii date pp conference_report personal_interest does not include interest on taxes other than income taxes that are incurred in connection with a trade_or_business for the rule that taxes on net_income are not attributable to a trade_or_business see sec_1_62-1 relating to nondeductibility of state income taxes in computing adjusted_gross_income in - 7jl1- addition personal_interest does not include interest of an s_corporation which is attributable to an underpayment of income_tax from a year in which the corporation was a c_corporation or from the underpayment of the taxes imposed by sec_1374 or sec_1375 nor does personal_interest include interest on an underpayment of income_tax of a corporation payable by a shareholder by reason of transferee_liability under sec_6901 tamra on date the technical corrections act of was introduced in the house of representatives h_r by ways_and_means_committee chairman rostenkowski and congressman duncan and in the senate s by finance_committee chairman bentsen and senator packwood sec_105 of the bills provided as follows sec_105 amendments related to title v of the reform act the tax_reform_act_of_1986 see sec_1 of the bills c amendments related to sec_511 of the reform act -- subparagraph a of sec_163 of the 1986_code defining investment_interest 1s amended by striking out incurred or continued to purchase or carry and inserting in lieu thereof properly allocable to subparagraph a of sec_163 of the 1986_code is amended by striking out incurred or continued in connection with the conduct of and inserting in lieu thereof properly allocable to - sec_119 of the bills provided that these amendments shall take effect as if included in the provision of the reform act to which such amendment relates on date the staff of the joint_committee on taxation released its description of the technical corrections act of h_r and s jcs-15-87 date at page sec_25 and sec_26 this staff pamphlet describes the above amendments as follows explanation of provisions investment_interest ---the bill conforms the language of the definition of investment_interest to the language of a related provision that allocates interest_expense to portfolio_income under the passive loss rule thus under the bill investment_interest is that which is properly allocable to property_held_for_investment this change resultss in consistency in the language of the provisions allocating interest_expense to the category of investment_interest and permits consistent application of a standard for allocation of interest this change is not intended to suggest the adoption of any particular method of allocation but rather to give treasury the ability to devise allocation rules as simple as possible consistent with the objectives of the provision personal_interest ---the bill conforms the language of the definition of personal_interest to the language of related provisions the passive loss rule and the investment_interest_limitation under which interest_expense may be allocated thus the bill provides that personal_interest does not include interest that is properly allocable to a trade_or_business this change results in consistency in the language of several significant provisions under which interest is likely to be allocated and permits consistent application of a standard for allocation of interest - as amended the provisions of the house bill were included as subtitle b of title x revenue provisions of the omnibus budget reconciliation act of h_r as passed by the house in date h rept pincite paragraphs and of section c of the house-passed h_r are identical to the language of paragraphs and of sec_105 of h_r set forth supra the description of the amendment to the definition of personal_interest in the house budget committee’s report the committee report for h_r is identical to the description of the amendment in the staff pamphlet describing sec_105 of h_r as introduced set forth supra h rept pincite the report’s description of the amendment to the definition of investment_interest adds to the description in the staff pamphlet describing sec_105 of h_r as introduced set forth supra id pincite below is the committee report explanation of the amendment to the definition of investment_interest the underscored language signifies language that was not included in the staff pamphlet describing sec_105 of h_r as introduced explanation of provisions investment_interest --the bill conforms the language of the definition of investment_interest to the language of a related provision that allocates interest_expense to portfolio_income under the passive loss rule thus under the bill investment_interest is that which is properly allocable to property held -- j4 --- for investment this change results in consistency in the language of the provisions allocating interest_expense to the category of investment_interest and permits consistent application of a standard for allocation of interest this change is not intended to suggest that the adoption of any particular method of allocation is required but rather to give treasury the ability to devise allocation rules as simple as possible consistent with the objectives of the provision the committee believes that the treasury should consider rules relating to the securing of property to mitigate some of the complexities of tracing where simplicity is desirable so that for example any interest on a loan secured_by personal_use_property could be considered personal_interest and any interest on a loan secured_by investment_assets could be considered investment_interest h rept pincite emphasis added on date senate budget committee chairman chiles reported s to the senate part ii of subtitle b of title iv of s as reported relates to technical amendments to tra paragraphs and of section c of s as reported are identical to the language of paragraphs and of sec_105 of s as introduced set forth supra the paragraph of the document explaining the bill’s s amendment to the definition of investment_interest as reported except for two typographical errors is identical to the corresponding paragraph of the house report set forth supra reconciliation submissions of the instructed committees pursuant to the concurrent resolution on the budget for fiscal_year h con res rept senate budget committee 100th cong 1st sess pincite the paragraph of the document explaining the bill’s s amendment to the definition of - - personal_interest is identical to both the corresponding paragraph in the house report and the staff pamphlet describing the provision in s as introduced set forth supra reconciliation submissions of the instructed committees pursuant to the concurrent resolution on the budget for fiscal_year h con res rept senate budget committee 100th cong lst sess pincite as a result of a budget summit with the white house the technical corrections were taken out of the budget reconciliation bill for h rept pincite c b pincite cong rec date colloquy between finance_committee chairman bentsen and senator cranston the senate then considered s and after completing work on floor amendments called up the house-passed bill h_r substituted the text of s as amended and asked for a conference cong rec date the senate- passed amendment to h_r did not include the technical corrections in s and they were not included in the bill as enacted s rept pincite on date the technical corrections act of was introduced in the house of representatives h_r by ways_and_means_committee chairman rostenkowski and congressman duncan and in the senate s by finance_committee chairman bentsen and senator packwood paragraphs and of sec_105 - - of the bills were identical to paragraphs and of sec_105 of h_r and s as introduced on date set forth supra sec_121 of the bills h_r and s provided that these amendments shall take effect as if included in the provision of the reform act to which such amendment relates on date the staff of the joint_committee on taxation released its description of the technical corrections act of h_r and s jcs-10-88 date at page sec_34 and sec_35 the staff pamphlet descriptions of the above amendments are identical to the committee report explanations of the same amendments to the definitions of investment_interest and personal_interest as proposed in set forth supra on date the ways_and_means_committee reported h_r with an amendment that replaced the entire text of the introduced bill h rept pincite paragraphs and of sec_105 of the committee’s amendment are identical to the introduced bill’s language and to paragraphs and of sec_105 of h_r and s as introduced on date set forth supra the committee’s report states in pertinent part as follows h rept pincite - - - il explanation of the bill title i --technical corrections to the tax_reform_act_of_1986 the technical correction titles title i and title ii contain clerical conforming and clarifying amendments to the provisions enacted by the tax_reform_act_of_1986 p l and other recently enacted legislation all amendments are sic made by these titles are meant to carry out the intent of congress in enacting the original legislation therefore no separate reasons for change is set forth for each individual amendment except as otherwise described the amendments made by the technical correction titles will take effect as if included in the original legislation to which each amendment relates the report’s descriptions of the amendments to the definitions of investment_interest and personal_interest are identical to the descriptions in the staff pamphlet describing the introduced bill which are identical to the committee report descriptions of the same amendments set forth supra h rept pincite on date the finance_committee reported s with an amendment that replaced the entire text of the introduced bill s rept pincite paragraphs and of sec_105 of the committee’s amendment are identical to the introduced bill’s language and to paragraphs and of sec_105 as introduced in in h_r and s the ways and means committee’s amendment added titles iii substantive tax provisions and iv ways and means subcommittee provisions and changed the short title of the bill sec_1 to miscellaneous revenue act of - - set forth supra the first paragraph of the committee report’s explanation of the bill is identical to the corresponding paragraph of the ways and means committee’s report which is identical to the committee report explanations of the same amendment as introduced on date in h_r and s set forth supra s rept pincite the finance_committee report’s descriptions of the amendments to the definitions of investment_interest and personal_interest are identical to the descriptions in the staff pamphlet describing the introduced bill which are identical to the committee report explanations of the same amendments set forth supra id pincite the senate considered s and after completing work on floor amendments called up the house-passed bill h_r substituted the text of s as amended passed h_r as so amended and asked for a conference cong rec date the house and senate amendments to the investment_interest and personal_interest definitions being identical they were approved without further explanation by the conference committee h conf rept vol i pincite the finance committee’s amendment added titles iii corrections to collection and exemption procedures for excise_taxes on diesel and nongasoline aviation fuels iv other corrections and modifications v railroad unemployment and retirement amendments and vi social_security act amendments but did not change the short title of the bill sec_1 - - vol ii pincite 1988_3_cb_473 see staff of joint_committee on taxation comparison of differing provisions of technical corrections jcx-30-88 the above-described amendments were enacted by paragraphs and of section c of the technical_and_miscellaneous_revenue_act_of_1988 tamra publaw_100_647 102_stat_3342 by sec_1019 of that act they took effect as if included in the respective tra provisions tamra sec_1019 sec_102 stat pincite - - ruwe j concurring i agree with the result reached by the majority however i cannot agree with the majority’s suggestion that the personal nature of the underlying income_tax deficiency and the related interest plays no role in determining the validity of sec_1_163-9t a temporary income_tax regs fed reg date on the contrary as i made clear in my dissenting opinion in 106_tc_31 i believe this to be a relevant and important factor the courts of appeals that have addressed this issue seem to agree see 190_f3d_791 7th cir revg tcmemo_1998_92 180_f3d_721 6th cir 173_f3d_533 4th cir 141_f3d_936 9th cir revg and remanding 106_tc_31 65_f3d_687 8th cir -- - thornton j concurring i am concerned that the majority opinion may contribute to confusion over the interpretive weight this court will accord nonauthoritative congressional staff materials in its analysis the majority opinion relies heavily on certain language appearing in the joint_committee on taxation general explanation of the tax_reform_act_of_1986 the blue_book in 106_tc_31 revd and remanded 141_f3d_936 9th cir this court pointedly disregarded this same blue_book language stating where there is no corroboration in the actual legislative_history we shall not hesitate to disregard the general explanation of the blue_book as far as congressional intent is concerned given the clear thrust of the conference committee report the general explanation of the blue_book is without foundation and must fall by the wayside to conclude otherwise would elevate it to a status and accord it a deference to which it simply is not entitled other opinions of this court echo the notion that we require some direct corroboration of congressional intentions before we defer to blue_book expressions thereof see 118_tc_1 although the staff of the joint committee’s explanation of a tax statute may be entitled to respect as a document that is prepared in connection with the legislative process by individuals who are intimately involved in that process we shall not hesitate to disregard the expressions set forth therein where as here those expressions are barren of - -- corroboration in the legislative_history 89_tc_357 the portion of the general explanation of the blue_book standing alone without any direct evidence of legislative intent is not unequivocal evidence of legislative intent affd 883_f2d_1350 7th cir the majority opinion’s reliance on the blue_book in overturning this court’s decision in redlark v commissioner supra raises at least three concerns first to the extent the majority opinion purports to find corroboration for the blue_book language in a joint_committee staff summary published during the conference on the act and not expressly considered in this court’s redlark opinion it 1s unsatisfactory the joint_committee staff summary is scarcely more reliable an indicator of congressional intentions than the blue_book itself like the blue_book the joint_committee summary was a staff-generated document it was released as a committee print rather than as a report there is no indication that any member of congress approved it during consideration of the act a mere proliferation or more precisely a mere doubling up of staff-generated materials cannot supply the want of direct evidence of congressional intentions - - second to the extent the majority opinion means to repudiate the views of this court as expressed in redlark and other opinions requiring some direct corroboration of blue_book expressions of congressional intentions it raises significant questions about the standard this court now intends to apply in assessing the interpretive weight to accord materials like the blue_book that technically are not part of the legislative_history the only express clue provided by the majority opinion appears in its statement that if a blue_book were to conflict with enacted language or controlling legislative_history then the statutory language or the controlling legislative_history would prevail majority op p this statement might be construed as suggesting that even in the absence of direct corroboration in the statute or other controlling legislative materials a blue_book explanation will be considered as controlling unless it actually conflicts with these materials any such suggestion is troublesome as has been observed elsewhere there should be no one generic standard for assessing the blue book’s authority rather the blue book’s interpretative weight depends in large measure on the role it is performing livingston what’s blue and white and not quite as good as a committee report general explanations and the role of ‘subsequent’ tax legislative_history am j tax poly where as here a blue_book explanation does - -- more than merely collate materials from the official committee reports or clarify inconsistencies therein and instead purports to add a new gloss to the statute we should be free to disregard the blue_book explanation or at least accord it greatly reduced interpretive weight third the stark divergence between this court’s analysis in redlark where we felt compelled to disregard the blue_book language altogether and in the majority opinion which appears to treat it as a substantial component of its analysis might be thought to largely account for the different results then and now as demonstrated however by the decisions of the five courts of appeal to address this issue which have coalesced around a straightforward analysis of judicial deference to agency actions the blue_book language with or without the joint_committee summary is not dispositive of the validity of the treasury regulations which is after all the issue before us rather the treasury regulations are ultimately validated as reasonably interpreting a facially ambiguous statute the blue_book language in question while supportive of this result is not essential to it by unduly elevating the blue book’s role in our analysis we risk giving encouragement to inventive counsel in future cases to troll deeply for other types of noncontrolling legislative materials that might be argued to betoken congressional intent gerber and gale jj agree with this concurring opinion - - wells c j dissenting i respectfully dissent from the majority’s refusal to follow 106_tc_31 revd and remanded 141_f3d_936 9th cir the meaning of sec_163 a can be discerned from a plain reading of the language of that section moreover prior caselaw defined the required nexus between an interest_expense on a deficiency and a trade_or_business and congress did not indicate any intent to overturn these cases also the majority placed undue emphasis and reliance on the blue_book in validating sec_1_163-9t a temporary income_tax regs fed reg date in contravention of precedent the majority contends that the language of sec_163 h a is ambiguous but the majority provides little analysis of the statute itself sec_163 a provides as follows sec_163 disallowance of deduction for personal_interest -- in general --in the case of a taxpayer other than a corporation no deduction shall be allowed under this chapter for personal_interest paid_or_accrued during the taxable_year personal_interest --for purposes of this section the term personal_interest means any interest allowable as a deduction under this chapter other than- a interest_paid or accrued on indebtedness properly allocable to a trade_or_business other than the trade_or_business of performing services as an employee - - petitioners contend that they should be permitted to deduct interest_paid on a deficiency arising from disallowed schedule c deductions relating to a sole_proprietorship a law firm although sec_163 disallows personal_interest deductions the reach of that section is truncated by sec_163 h a which excepts interest properly allocable to a trade_or_business from the definition of personal_interest congress did not provide a definition for interest properly allocable to a trade_or_business in interpreting what congress meant by properly allocable to a trade or bussiness however courts should give the phrase properly allocable its usual or plain meaning 234_f3d_904 5th cir a reasonable reading of the phrase properly allocable would conclude that the phrase means fairly or correctly relating to a trade_or_business interest_paid on deficiencies arising from deductions taken by a sole_proprietorship should fall within this class of interest courts should only depart from the plain language of a statute to avoid a result so bizarre that congress could not have intended it 288_f3d_199 5th cir reaching the conclusion that the interest_paid on a deficiency arising from a sole_proprietorship is properly allocable to a trade_or_business is surely not a bizarre result the intent of congress is best determined by examining the language of the statute 269_f3d_523 5th cir congress defined the types of interest excepted from personal_interest by direct references to other code sections except for interest properly allocable to trade_or_business income from this it can be inferred that the intent of congress was to use the plain meaning of the term properly allocable to trade_or_business interest in sec_163 b congress refers to sec_163 for a definition of investment_interest in sec_163 c congress refers to sec_469 for the definition of portfolio_interest in sec_163 d congress refers to sec_163 for a definition of gualified residence interest in sec_163 fe congress refers to sec_6601 finally in sec_163 f congress refers to sec_221 for a definition of interest on educational loans congress also provided some indication of what constitutes interest properly allocable to trade_or_business in sec_469 relating to the passive_activity_loss rules the meaning of properly allocable may be determined by looking at adjoining words and phrases 308_f2d_938 5th cir sec_469 a i ii and iii provide sec_469 special rules for determining income or loss from a passive_activity ---for purposes of this section-- certain income not treated as income from -- - passive_activity -- in determining the income or loss from any activity --- a in general -- there shall not be taken into account-- any- ii expenses other than interest which are clearly and directly allocable to such gross_income and iii interest_expense properly allocable to such gross_income in sec_469 was enacted concurrently with sec_163 h a as originally enacted sec_163 h a read incurred or continued in connection with the conduct of and was changed in to properly allocable this was done in an effort to harmonize sec_163 a with sec_469 when congress enacted sec_469 and later amended sec_163 h a it had the opportunity to place limits on the relationship that an interest_expense must bear to the conduct of an active trade_or_business congress explicitly limited the clearly and directly allocable standard to business_expenses and the properly allocable standard to interest_expenses it reasonably can be inferred that clearly and the technical_and_miscellaneous_revenue_act_of_1988 publaw_100_647 sec c 102_stat_3342 h rept pincite - - directly allocable is more restrictive than properly allocable congress could have used the same standard clearly and directly in sec_469 and sec_163 a yet instead used the properly allocable standard for sec_163 h a case law prior to the enactment of sec_163 h a defined the nexus between an interest_expense and a trade_or_business an interest_expense arising from a deficiency related to a trade_or_business was treated like other business_expenses and could be deducted by a sole_proprietorship 28_tc_789 affd 259_f2d_450 4th cir see 31_tc_412 affd 276_f2d_601 10th cir see also 35_tc_571 affd 299_f2d_380 7th cir the above cases relied on sec_22 a a and d of the internal_revenue_code_of_1939 this definition comports with the holding in 372_us_39 which provided that the relevant inquiry is whether the origin and character of the claim with respect to which an expense was incurred is the controlling basic test of whether the expense was ‘business’ or ‘personal’ id congress is considered to be aware of these cases and the decisions existing before enactment of legislation 238_f3d_603 5th cir congress is considered to be aware of all pertinent judgments by our -- - branch 41_f3d_935 5th cir thus congress is considered to have been aware of standing polk and reise when enacting sec_163 h a the majority contends that standing polk and reise were rendered ineffective by the passage of sec_163 h a because sec_163 a is different from the statutes on which the holdings of those cases were based and thus this change in language indicates a change in the meaning of the statute majority op p citing 464_us_16 however it is well settled that when congress seeks to overturn prior case law it must do so in an explicit manner an implicit inference to change the status quo is impermissible 621_f2d_207 5th cir see 874_f2d_169 3d cir where congress intends to overturn prior_law it must do so in clear unmistakable and unarguable language 165_f3d_1297 10th cir conference committee reports are valuable in determining if congress intended to overturn prior_law sea-land serv inc v united_states supra see 23_f2d_477 8th cir congress did not express any intention to overturn standing polk and reise in the conference committee reports or elsewhere in the legislative_history of the tax_reform_act_of_1986 --- - tra publaw_99_514 100_stat_2233 standing polk and reise were based on statutory language which permitted a deduction for interest if it arose in carrying_on_a_trade_or_business and attributable to the taxpayer’s trade_or_business see sec_23 a n and d of the internal_revenue_code_of_1939 the majority argues that this language is different from the language interest_paid or accrued on indebtedness incurred or continued in connection with the conduct_of_a_trade_or_business and the technical_and_miscellaneous_revenue_act_of_1988 tamra publaw_100_647 sec c 102_stat_3390 language and because of this difference the sections have a different meaning in russello the supreme court analyzed the substantive differences between the two provisions in question russello v united_states supra pincite examining the substantive changes and history of u s c sec a the racketeer influenced corrupt organization statute in russello the supreme court determined that congress expanded a provision beyond its original scope id the majority has not engaged in such an analysis additionally the supreme court was construing language in the same statute in russello whereas in the instant case there are several statutes in question moreover it is not necessarily clear that the pre-1986 tra language is substantively different from the tra language - and the tamra language the argument that a simple change indicates a different meaning seems to fail in the context of tra and tamra where congress replaced interest_paid or accrued on indebtedness incurred or continued in connection with the conduct_of_a_trade_or_business in sec_163 h a with properly allocable the tamra conference committee report does not indicate an intent to change the meaning or reach of sec_163 a however reverting to the plain meaning of these two phrases it 1s reasonable to assert that they have the same meaning even though the language is different the same should be true for the pre-1986 tra language the majority concludes that the language of sec_163 h a 1s ambiguous which requires an examination of the legislative_history of the sec_163 a as mandated by 467_us_837 the joint statement of managers of the conference_report h conf rept at ii-151 to ii-154 1986_3_cb_154 published date conference committee report provides under the conference agreement personal_interest is not deductible personal_interest is any interest other than interest incurred or continued in connection with the conduct_of_a_trade_or_business other than the trade_or_business of performing services as a employee investment_interest or interest taken into account in computing the taxpayer’s income of loss from passive activities for the year personal_interest also generally includes interest on tax deficiencies - - the majority argues that the use of the term deficiencies in the conference committee report may be unclear and that generally only excludes certain types of estate_taxes from personal_interest majority op pp the effect of these arguments is to restrain the force of the conference committee report in determining the reach of what is properly allocable to a trade_or_business the term deficiency means the amount by which the income gift or estate_tax due under the law exceeds the amount of such tax_shown_on_the_return 74_tc_1097 the plain language of the conference committee report supports petitioners because it excepts from personal_interest interest incurred or continued in connection with the conduct_of_a_trade_or_business h conf rept at ii- supra c b vol pincite the interest was incurred as a result of a tax_deficiency arising from the operation of a sole_proprietorship the final sentence in the above passage does not detract from this reading generally is defined as in disregard of specific instances and with regard to an overall picture webster’s tenth collegiate dictionary the use of the term generally indicates that the conference committee understood that personal_interest usually includes interest on tax deficiencies however there are exceptions to this rule a reasonable inference would be that -- - interest on tax deficiencies arising from a sole_proprietorship are not within personal_interest because the previous sentence excepted that class of interest from personal_interest if the conference committee intended all interest on deficiencies to be included in personal_interest then the conference committee could have left the word generally out of the last sentence so that personal_interest would cover all interest on deficiencies the majority holds that the conference committee report is not clear and accordingly justifies its reliance on the joint_committee on taxation general explanation of the tax_reform_act_of_1986 pp published date blue_book majority op p the majority argues that the confusion is further exacerbated because the blue_book provides that interest on a tax_deficiency relating to a sole_proprietorship is considered personal_interest the majority goes too far in rejecting the conference committee report in favor of the blue_book in upholding the validity of sec_1_163-9t a temporary income_tax regs supra and refusing to follow 106_tc_31 the majority provides as applied to the instant case sec_1 9t b i a temporary income_tax regs supra treats petitioners’ payment of interest as nondeductible personal_interest the text of sec_163 h a does not compel this result the relevant legislative_history however lends some support to this interpretation of the statute majority op pp - - the legislative_history the majority relies on is the material contained in the blue_book and in the joint_committee on taxation summary of conference agreement on h_r tax_reform_act_of_1986 jcs-16-86 date staff summary the blue_book was published by congressional staff after the enactment of tra the majority argues the staff summary which was produced before tra was enacted corroborates assertions made in the blue_book regarding personal_interest such reliance is unwarranted and contrary to precedent a staff committee’s explanation of a provision is not a statement by legislators and was not relied on by legislators when enacting the tra because it was published in date 764_f2d_322 5th cir affg t c memo see 89_tc_357 a staff summary explanation provided after the enactment of a provision is not legislative_history 985_f2d_819 5th cir affg 97_tc_237 see zinniel v commissioner supra the staff summary explanation cannot be considered part of the legislative_history because it was authored by congressional staff the staff of the joint_committee on taxation and not by congress 765_f2d_665 7th cir affg tcmemo_1984_55 the staff summary however may be given some -- - deference especially when the staff views expressed are consistent with items of legislative_history id it agree with judge thornton’s concurring opinion to the extent that he concludes that the majority’s reliance on the blue_book is misplaced the blue_book represents only the view of the congressional staff it was not approved by congress furthermore the blue_book could not have been relied upon by congress because it was published during the 100th congress and the tax reform act was enacted by the 99th congress also the blue_book should not be relied on because it is inconsistent with the conference committee report which would not treat interest on a tax_deficiency arising from a sole_proprietorship as personal_interest whereas the blue_book would treat such interest as personal_interest consequently the majority’s reliance on the blue_book in validating sec_1 9t b a temporary income_tax regs supra must be rejected sec_1_163-9t a temporary income_tax regs supra was not promulgated as part of a legislative mandate permitting the commissioner to write regulations rather those the blue_book provides personal_interest also includes interest on underpayments of individual federal state or local_income_taxes notwithstanding that all or a portion of the income may have arisen in a trade_or_business because such taxes are not considered derived from the conduct_of_a_trade_or_business staff of joint comm on taxation general explanation of the tax_reform_act_of_1986 pincite j comm print - - regulations were promulgated pursuant to the commissioner’s sec_7805 general power to promulgate interpretative regulations an interpretative_regulation warrants less deference than legislative_regulation 455_us_16 congress did grant the commissioner the power to enact legislative regulations with respect to some provisions of sec_163 but not with regard to sec_163 a the commissioner has not promulgated permanent regulations despite the fact that this temporary_regulation was first promulgated in finally the majority’s validation of sec_1 9t b i a temporary income_tax regs supra begs a significant policy question and that is whether congress ever intended to deny individuals doing business through sole proprietorships the advantages they would enjoy had they engaged as a corporate form see 106_tc_31 in the year before tra was enacted there were big_number nonfarm sole_proprietorship returns filed with the internal_revenue_service ’ and as of there were big_number nonfarm sole_proprietorship returns filed with the see judge swift’s dissent pp and see generally judge vasquez’s dissent statistics of income bulletin vol no from table -nonfarm sole_proprietorship returns selected income statement items for specified income years summer -- -- internal_revenue_service it is difficult to imagine that congress was not aware of the number of individuals engaged in sole proprietorships in it is even more difficult to comprehend that congress would deny this large segment of the business world a deduction for interest which i believe is clearly allocable to a trade_or_business without more discussion in the legislative_history or at least a clear directive to the commissioner to effect such a policy to permit such a result is to allow the commissioner to make an end run around the legislative powers of congress for the foregoing reasons i respectfully dissent swift colvin laro and vasquez jj agree with this dissenting opinion statistics of income bulletin vol no from table -nonfarm sole proprietorships business receipts payroll and net_income by industrial sectors classified with the north american industries classification system summer - swift j dissenting mainly for the reasons set forth in my prior concurring opinion in 106_tc_31 revd and remanded 141_f3d_936 9th cir i believe petitioners’ income_tax deficiency_interest should be regarded as properly allocable to petitioners’ business under sec_163 a and as deductible under sec_163 a none of the five courts of appeals’ opinions cited by the majority or the instant majority opinion persuades me to the contrary within the jurisdictions of the other seven geographic courts of appeals taxpayers still are entitled to rely on our court--reviewed redlark opinion and that is exactly what mr and mrs robinson have done 99_tc_490 two separate but related facts in this case are clear and undisputed under the express and clear language of sec_163 h a if an interest_expense is properly allocable toa trade_or_business the interest_expense is deductible and the tax adjustments giving rise to petitioners’ tax_deficiency arose directly from and in connection with petitioners’ law business accordingly some portion of the related interest_expense should be allocable to the business and should be deductible under respondent’s temporary_regulation sec_1 9t b a temporary income_tax regs fed reg date outstanding now for years petitioners’ interest_expense is nondeductible regardless of the fact that it was incurred by petitioners in connection with the business respondent’s temporary_regulation and position herein should be rejected as an erroneous attempt to redefine the substantive provision of sec_163 h a respondent’s temporary_regulation may provide reasonable methods for allocating interest between a taxpayer’s business and a taxpayer’s other activities but if there is no question as to what an item of interest_expense relates to then the statute is clear and requires an allocation between the business and the nonbusiness portions thereof and the portion allocable to the taxpayer’s business is to be allowed as a deduction respondent’s temporary_regulation in a situation involving a sole_proprietorship trade_or_business and a related_income tax_deficiency improperly and contrary to the statute establishes a per se interest_expense disallowance rule and would leave no interest_expense to be allocated respondent’s temporary_regulation is also inconsistent with sec_1_163-9t temporary income_tax regs fed reg date and with the allocation rule provided in the sister regulation relating to situations where no loan proceeds are involved in an underlying transaction or activity namely where a seller or provider of goods or services provides financing to a taxpayer or where a transaction involves interest_expense associated with a mere extension of credit not a provision of funds sec_1_163-8t temporary income_tax regs fed reg date provides as follows if a taxpayer incurs or assumes a debt in consideration for the sale or use of property for services or for any other purpose or takes property subject_to a debt and no debt proceeds are disbursed to the taxpayer the debt is treated for purposes of this section as if the taxpayer used an amount of the debt proceeds equal to the balance of the debt outstanding at such time to make an expenditure for such property services or other purpose emphasis added the above temporary_regulation provides that in the situations and for any purpose where financing and credit transactions do not involve the disbursement of loan proceeds but do involve the extension of credit interest_expense relating to the extension of credit is to be allocated between the taxpayer’s business and personal activity based on the nature of the underlying activity giving rise to the extension of credit under sec_1_163-8t temporary income_tax regs supra as applicable to the instant case even though no loan proceeds were disbursed by the government to petitioners credit was extended by the government to petitioners and petitioners were charged interest with regard thereto because the underlying activity in question in this case giving rise to the tax_deficiency and to the government’s extension of credit to petitioners undisputedly relates to petitioners’ business under sec_1_163-8t temporary income_tax regs supra some interest_expense should be treated as properly allocable to petitioners’ business and as deductible under the statute as suggested in judge vasquez’s dissenting opinion in interpreting the statutory provisions in dispute herein the occasional deference mandated by 467_us_837 to governmental agency interpretations of statutory language left ambiguous by congress is not applicable more recently in 533_us_218 the supreme court addressed the general and flexible standard to be used by courts in evaluating what deference if any should be given to agency interpretative regulations and rulings as follows the fair measure of deference to an agency administering its own statute has been understood to vary with circumstances and courts have looked to the degree of the agency’s care its consistency formality and relative expertness and to the persuasiveness of the agency’s position id pincite fn refs omitted and further the weight accorded to an administrative judgment in a particular case will depend upon the thoroughness evident in its consideration the validity of its reasoning its consistency with earlier and later pronouncements and all those factors which give it power to persuade if lacking power to control id pincite quoting 323_us_134 consistent with the above statement quoting skidmore and before concluding whether the particular agency rulings involved therein of the environmental protection agency and of the u s customs service respectively were entitled to chevron type deference in both chevron and mead the supreme court reviewed the very detailed and reasoned historical aspects of the e_p a ruling chevron u s a inc v natural res def council inc supra pincite and the many angles of the classification ruling procedures of the u s customs service united_states v mead corp supra pincite in the instant case however with regard to respondent’s promulgation of sec_1_163-9t a temporary income_tax regs fed reg date there is scant indication of respondent’s deliberations and degree of care exercised prior to promulgation of the temporary_regulation no history of the development of the temporary_regulation is available no hearing was held no notice and comment were provided no proposed regulation was made available no history of respondent’s development of the policy position reflected in the temporary_regulation is available it appears to me that the statement in the blue_book discussed infra and respondent’s failed litigating position in years prior to a sec_1 see 467_us_837 part vi pincite 533_us_218 part b pincite to the deductibility of income_tax deficiency_interest relating to an individual’s trade_or_business see cases cited infra note are the only historical angles that would support the per se disallowance rule_of sec_1_163-9t a temporary income_tax regs supra that being the case chevron type deference is hardly appropriate of the courts of appeals that have addressed the issue before us two inappropriately treat sec_1 9t b a temporary income_tax regs supra as a legislative_regulation see 141_f3d_936 9th cir 65_f3d_687 8th cir to the contrary where it so intends congress knows how to specifically delegate legislative regulatory authority with regard to tax legislation and nowhere in sec_163 do we find such a delegation for examples of such specific delegation of legislative authority within just the other subsections of sec_163 see sec_163 c involving interest_expense on certain types of obligations that are not in_registered_form sec_163 involving interest_expense on certain types of corporate debt instruments with substantial original_issue_discount and sec_163 involving interest_expense on certain types of corporate indebtedness payable in the equity of the debtor although upholding it the court_of_appeals for the seventh circuit noted its concern with regard to the deference to be given sec_1_163-9t a temporary income_tax regs supra as follows in the absence of any confirmation that the temporary_regulation has after the fact undergone the scrutiny that typifies a pre-adoption notice and comment period one could argue that sec_1_163-9t a is entitled to no more deference than a proposed regulation whatever questions the temporary nature of this regulation might raise as to the degree of deference it is owed the parties themselves have chosen not to pursue them x kk 190_f3d_791 7th cir revg tcmemo_1998_92 with regard to the relevant legislative_history relating to enactment in of subsection h of sec_163 i submit that a reading thereof is available which has not yet been considered by the various courts addressing this issue and which would support a plain-meaning interpretation of sec_163 h a allowing the deduction of individual income_tax deficiency_interest relating to a trade_or_business and which would not support respondent’s per se disallowance rule in the joint statement of managers of the conference_report h conf rept vol ii at ii-154 c b vol published on date the following statement is made under the conference agreement personal_interest is not deductible personal_interest is any interest other than interest incurred or continued in connection with the conduct_of_a_trade_or_business personal_interest also generally includes interest on tax deficiencies emphasis added the emphasized language in the above quotation from the legislative_history can be read to indicate that congress in intended to carve out of the definition of personal_interest all interest relating to a trade_or_business once all trade_or_business interest is carved out of personal_interest by the above emphasized language the next sentence generally describing personal_interest only reaches types of interest left over but not business_interest that already is carved out by the prior language with this reading of the legislative_history the last sentence in the above quotation namely personal_interest also generally includes interest on tax deficiencies may be read to reach only interest on tax deficiencies not related to a taxpayer’s trade_or_business of the approximately law review and journal articles pre- and post--106_tc_31 revd and remanded 141_f3d_936 9th cir that comment substantively on the issue before us seven support our original redlark opinion on the statutory interpretation and one supports it on eller interest_deduction for noncorporate tax deficiencies taxn for acct lipton redlark reversed but interest deductions for business tax deficiencies is still an open issue j taxn lipton divided tax_court allows deduction of interest on tax arising from a trade_or_business j taxn newmark englebrecht courts split on individuals’ deficiency_interest deduction prac tax strat raby raby allocating individual tax_deficiency interest tax notes andreozzi comment prohibiting the deduction for noncorporate tax_deficiency interest when continued policy grounds two articles agree with the courts of appeals’ reversals on the statutory interpretation the balance of the articles comment on the issue and the controversy but appear to take no position one way or the other one commentator stated temp_reg 163-9t b a should be invalidated if it is inconsistent with other statutes and regulations it appears to be in conflict with temp_reg 8t c which was also enacted after the blue_book explanation was published this regulation controls when no loan proceeds are received as follows if a taxpayer incurs or assumes a debt in consideration for the sale or use of property for services or for any other purposes or takes property subject_to a debt and no debt proceeds are disbursed to the taxpayers the debt is treated for purposes of this section as if the taxpayer used an amount of the debt proceeds equal continued treasury goes too far j marshall l rev reynolds comment redlark v commissioner a ‘bird in the hand’ for noncorporate taxpayers case w res l rev engel deducting interest on federal_income_tax underpayments a roadmap through a 50-year quagmire va tax rev harllee 536-2nd tax mgmt bna interest_expense deductions at a-113 popkin the taxpayers’ third personality comments on redlark v commissioner ind l j mertens law of federal income_taxation sec_26 pincite banoff et al after allen is there substantial_authority for deducting interest on tax deficiencies j taxn banoff et al two more courts reject redlark -- interest on taxes not deductible j taxn raby deducting interest on a form_1040 deficiency tax notes interest on taxes never deductible ninth circuit says - redlark reversed j taxn to the balance of the debt outstanding at such time to make an expenditure for such property services or other purpose in the case of deficiency_interest the government essentially extends credit to a taxpayer and assesses interest for the extension of that credit thus when the underlying activity which creates the deficiency relates to a taxpayer’s business the interest is ‘allocable’ to the business and deductible under sec_163 a quoting 987_fsupp_460 d c n c revd 173_f3d_533 4th cir since temp_reg 9t b a in direct conflict with an earlier- enacted regulation that also covers the deductibility of deficiency_interest related to a trade_or_business temp_reg 163-9t b a cannot be considered a reasonable interpretation of the statute newmark englebrecht courts split on individuals’ deficiency_interest deduction prac tax strat fn ref omitted with regard to the blue_book to the act and its peculiar origin we noted in our original opinion redlark v commissioner t c pincite n as follows w e also note that the tax_reform_act_of_1986 publaw_99_514 100_stat_2085 was enacted on date during the 99th congress whereas the general explanation the blue_book was published on date during the 100th congress thus the general explanation is not even entitled to the respect it might otherwise be accorded if it had been prepared for the congress which enacted sec_163 see also 118_tc_1 involving the alternative_minimum_tax under sec_55 and commenting on the limited usefulness of the blue_book applicable to the act further with regard to the blue_book see the concurring opinion herein of judge thornton with regard to the legal context or climate which existed in at the time subsection h of sec_163 was added to the code another commentator has stated the problem with the dissent’s reasoning in our redlark opinion t c is that like the eighth circuit in 65_f3d_687 8th cir it assumes that the statute is unclear this assumption is based on the fact that sec_163 a defines personal_interest by excluding business_interest without providing a specific definition for business_interest the eighth circuit in miller held that the absence of a definition of business_interest created the ambiguity on which the irs could hang its hat as the tax court’s decision illustrates however congress does not legislate in a vacuum under the prior case law the interest on an income_tax deficiency resulting from an adjustment involving a trade_or_business was treated as interest incurred ina trade_or_business if congress is deemed to have been aware of the law at the time it enacted sec_163 h a there was no ambiguity in the statutory language lipton divided tax_court allows deduction of interest on tax arising from a trade_or_business j taxn lastly as i read it the legislative_history relating to the and the relevant legislative changes to sec_163 shows that congress in disallowing personal_interest was addressing consumer interest not interest that was specifically attributable to a taxpayer’s trade_or_business in sum sec_1_163-9t a temporary income_tax regs fed reg date is only interpretative after years it is still in temporary form since date temporary regulations promulgated continued taking into account all those factors that bear upon its persuasiveness see the above quotation from 533_us_218 namely-- the unambiguous statutory language of sec_163 h a under which all interest_expense properly allocable to a trade_or_business is deductible the relevant legislative_history the case law existing at the time sec_163 was enacted in that allowed a deduction for income_tax deficiency_interest relating to a taxpayer’s business ’ the language of sec_1_163-9t temporary income_tax regs supra and the language of sec_1 8t c ii temporary income_tax regs supra both of which would support an allocation and the deduction of an individual taxpayer’s trade_or_business related_income tax_deficiency interest and the lack of any indication that treasury or respondent prior to promulgation of sec_1_163-9t a temporary income_tax regs supra under which a per se disallowance rule was adopted affecting thousands of individual taxpayers’ gave any significant policy consideration to the question of statutory interpretation at issue herein continued thereafter automatically sunset after years sec_7805 ’ see 35_tc_571 affd 299_f2d_380 7th cir 31_tc_412 affd 276_f2d_601 10th cir 28_tc_789 affd 259_f2d_450 4th cir note that sec_1_163-8t temporary income_tax regs was promulgated on date fed reg date prior to promulgation on date of sec_1_163-9t b a temporary income_tax regs fed reg date see the dissenting opinion of chief_judge wells sec_1_163-9t a temporary income_tax regs supra is entitled to little if any deference it is not persuasive and it should be rejected respectfully in my opinion petitioners’ business-related income_tax deficiency_interest should be deductible wells colvin laro and vasquez jj agree with this dissenting opinion vasquez j dissenting the majority has failed to convince me that we should not abide by our previous holding in 106_tc_31 revd and remanded 141_f3d_936 9th cir i continue to agree that sec_1_163-9t b a temporary income_tax regs fed reg date the 9t regulation is invalid for the reasons stated in the majority and concurring opinions in redlark i write separately however to address the appropriate standard of review applicable to the case at bar in light of the u s supreme court’s opinion in 533_us_218 and the various courts of appeals’ opinions--- including the fifth seventh eighth ninth and district of columbia circuit opinions--addressing mead i mead in mead the u s supreme court clarified the limits of deference pursuant to 467_us_837 owed to an agency’s interpretation of a statute it administers the court held that an agency’s interpretation of a particular statutory provision qualifies for chevron_deference when congress delegated authority to the agency to make rules carrying the force of law and the agency interpretation claiming deference was promulgated in the exercise of that authority united_states v mead corp supra pincite thus the delegation of authority by congress to the agency is insufficient in and of itself to entitle the agency implementation to chevron_deference the agency must also actually invoke the authority delegated id pincite the court clarified chevron by stating that the delegation of authority may be either explicit or implicit and when chevron_deference applies a reviewing court is obliged to accept the agency’s position if congress has not previously spoken to the point at issue and the agency’s interpretation is reasonable id pincite thus any regulation entitled to chevron_deference is binding on the courts unless procedurally defective arbitrary or capricious in substance or manifestly contrary to the statute id pincite precedential value alone however does not add up to chevron entitlement interpretive rules sometimes may function as precedents and they enjoy no chevron status as a class id pincite although not limiting chevron_deference to situations where notice-and-comment rulemaking or formal adjudications took place the court focused on these attributes and stated they are significant in determining whether congress contemplated administrative action with the effect of law and whether chevron_deference is appropriate ’ id pincite the court cites numerous cases where notice-and-comment rulemaking took place but only one where it did not and chevron_deference was accorded 533_us_218 n ndollar_figure -- - when an agency’s interpretation of a particular statutory provision does not qualify for chevron_deference it still may merit some deference pursuant to 323_us_134 united_states v mead corp supra pincite pursuant to skidmore the agency’s interpretation would be accorded respect proportional to its power to persuade id pincite il chronology of the case law pre-mead a miller--bighth circuit the u s court_of_appeals for the hbighth circuit was the first court_of_appeals to address the validity of the 9t regulation 65_f3d_687 8th cir the court_of_appeals for the bighth circuit relied on chevron to determine the validity of the 9t regulation id pincite the court did not state that sec_163 h a was ambiguous instead it concluded that congress failed to define what constitutes business_interest in the statute and this was an implicit legislative delegation of authority to the commissioner id pincite but see judge swift’s dissent p the court then relied on the general explanation of the tax_reform_act_of_1986 blue_book issued by the staff of the joint_committee on taxation to conclude that the 9t regulation was a permissible construction of the statute id pincite it is unclear why the court chose to focus on business_interest rather than personal_interest b redlark tax_court in redlark we noted that the 9t regulation was an interpretive rather than a legislative_regulation redlark v commissioner t c pincite we respectfully disagreed with the court_of_appeals for the bighth circuit’s conclusion and held that the 9t regulation was unreasonable and an impermissible reading of the statute id pincite in dissent judge halpern stated that in the absence of temporary regulations a reasonable interpretation of sec_163 h a would include the interest here in question and that deficiency_interest attributable to nonemployee trade_or_business income is not personal_interest id pincite halpern j dissenting in his view however we should have upheld the 9t regulation as valid as it was entitled to chevron_deference id pincite halpern j dissenting ninth circuit the u s court_of_appeals for the ninth circuit agreeing with the bighth circuit reversed redlark v commissioner f 3d pincite the court_of_appeals for the ninth circuit like that of the ehighth circuit also treated the 9t regulation as a legislative_regulation id pincite the court gave the 9t regulation chevron_deference and stated that the issue was whether the 9t regulation was a permissible interpretation of sec_163 id pincite the court_of_appeals for the ninth circuit acknowledged that it was reasonable that income_tax deficiencies should properly be considered allocable to their business id pincite the court however applied chevron and like the ebighth circuit relied on the blue_book to conclude that the 9t regulation was a permissible construction of the statute id pincite cc allen--fourth circuit the u s court_of_appeals for the fourth circuit concluded that sec_163 was ambiguous 173_f3d_533 4th cir it based this conclusion on the absence of a statutory directive as to the meaning of properly allocable and the fact that there were sharply divergent opinions in redlark id pincite the court applied chevron and accorded the 9t regulation chevron_deference id pincite the court_of_appeals for the fourth circuit also relied on the blue_book to conclude that the 9t regulation was a permissible construction of the statute id pincite d mcdonnell----sixth circuit the u s court_of_appeals for the sixth circuit without analysis simply relied on the analysis of the court_of_appeals for the ninth circuit in redlark 180_f3d_721 6th cir this suggests that every time a statute fails to define a word or term or any time judges disagree regarding the meaning of a word or phrase in a statute the statute is automatically ambiguous eb kikalos---seventh circuit the u s court_of_appeals for the seventh circuit acknowledged that the 9t regulation is an interpretive regulation 190_f3d_791 7th cir revg tcmemo_1998_92 which relied on our opinion in redlark the court_of_appeals for the seventh circuit stated that interpretive regulations of this sort when subject_to a notice-and-comment procedure are reviewed deferentially under the criteria articulated in chevron and its progeny id the court noted that the 9t regulation did not go through notice-and- comment and that such a regulation might be entitled to no more deference than a proposed regulation id pincite the court_of_appeals for the seventh circuit however left for another day what deference a regulation of this sort is due because the parties assumed chevron_deference applied id therefore the court accorded the 9t regulation chevron_deference id the court_of_appeals for the seventh circuit acknowledged that in light of the cases predating the tax_reform_act_of_1986 tra publaw_99_514 100_stat_2085 one could argue with some force that where an income_tax deficiency results froma taxpayer’s trade_or_business the interest accrued on that deficiency should be allocable to the trade_or_business id at proposed_regulations are generally not afforded any more weight than that of the position advanced by the commissioner on brief 108_tc_107 88_tc_894 based on the blue_book and the deference to be accorded under chevron however the court upheld the validity of the regulation id f summary of the cases thus all five of the courts of appeals accorded the 9t regulation chevron_deference til post-mead case law in the years that have passed since the u s courts of appeals issued their opinions regarding the 9t regulation principles of law have developed regarding the chevron_doctrine see supra part i the u s court_of_appeals for the fifth circuit the circuit to which appeal in the instant case lies has stated mead clarified that chevron’s expansive conception of judicial deference to an administrative agency’s legal interpretation applies only when ‘congress delegated authority to the agency generally to make rules carrying the force of law and x the agency interpretation claiming deference was promulgated in the exercise of that authority ’ 274_f3d_173 n 5th cir in the absence of chevron_deference pursuant to mead the agency’s interpretation is accorded respect under skidmore according to its power to persuade id pincite see also 267_f3d_1132 d c cir when chevron_deference does not apply the irs’s interpretations are entitled to no more than the weight derived from their ‘power to persuade ’ in light of mead chevron_deference is reserved for only those agency interpretations reached through notice-and-comment or comparable formal administrative procedures 286_f3d_476 7th cir 279_f3d_614 8th cir 270_f3d_1137 7th cir involving the commissioner of internal revenue revg 113_tc_329 while the supreme court left open the possibility that chevron_deference may be appropriate in instances similar to notice-and-comment rulemaking or formal adjudication it did not clearly outline these instances 265_f3d_572 7th cir agency interpretations that are not the result of such formal administrative procedures are entitled to the lesser deference accorded under skidmore ind family soc servs admin v thompson supra pincite teambank n a v mcclure supra pincite n u s freightways corp v commissioner supra pincite furthermore in applying mead mere ambiguity in a statute is not evidence of congressional delegation of authority agency authority is not to be lightly presumed and courts should not only when agencies act through ‘adjudication notice- and-comment rulemaking or some other procedure indicat ing comparable congressional intent whatever that means ’ is chevron_deference applicable united_states v mead corp supra pincite scalia j dissenting presume a delegation of power based solely on the fact that there was not an express withholding of such power 268_f3d_1075 n d c cir the fact that a court pre-mead found the agency’s position to be reasonable under the chevron standard is insufficient after mead if chevron is inapplicable the agency’s position must be persuasive matz v household intl tax reduction inv plan supra pincite applying this rule to the irs it is plain error for courts to rely on chevron in determining what deference to give agency actions without considering mead am fedn of govt employees afl-cio v veneman 284_f3d_125 d c cir to the extent decisions using a pre-mead analysis differ from the analysis set forth in mead mead controls 273_f3d_1146 n 9th cir iv applying mead to this case it note that chevron has had a checkered career in the tax arena 104_tc_384 the degree to which courts are bound by agency interpretations of law has been like quicksand the standard seems to have been constantly shifting steadily sinking and from the perspective of the intermediate appellate courts frustrating 47_f3d_787 6th cir revg tcmemo_1993_322 we have previously avoided pre-mead the question of whether temporary regulations promulgated without notice-and- comment procedures are entitled to chevron_deference 113_tc_309 we also have previously questioned pre-mead whether chevron applies to interpretive regulations cent pa sav association v commissioner supra pincite citing e i dupont de nemours co v commission41_f3d_130 3d cir affg t cc the question of what deference interpretive regulations including temporary regulations issued without notice-and-comment procedures are entitled needs to be answered in light of mead the first question in the mead analysis is whether congress delegated authority to the agency to make rules carrying the force and effect of law united_states v mead corp supra pincite pool co v cooper supra pincite n the second gquestion is whether the agency invoked that authority united_states v mead corp supra pool co v cooper supra in this case however even assuming that we were to answer the first question in the affirmative we must answer the second gquestion-- whether the agency invoked the authority delegated--in the negative for the reasons set forth below regulations are either legislative or interpretive in character tutor-saliba corp v commissioner t cc interpretive regulations are promulgated under the -- - general authority vested in the secretary by sec_7805 whereas legislative regulations are issued pursuant to a specific congressional delegation to the secretary id 97_tc_180 affd 983_f2d_868 8th cir an interpretive regulation may be contrasted to a legislative_regulation one which is mandated specifically in the statute and has the force and effect of law 74_tc_836 n in redlark v commissioner t c pincite we stated the regulations involved herein were promulgated pursuant to the general authority granted to the secretary_of_the_treasury by sec_7805 and not pursuant to specific legislative authority t d 1988_1_cb_80 they are therefore interpretive the majority opinion in this case agrees with this conclusion and the commissioner concedes that the 9t regulation is an interpretive regulation majority op p as such even if the statute were ambiguous but see chief_judge wells’s dissent and assuming congress delegated authority to the irs to make rules carrying the force and effect of law in this area but see judge swift’s dissent p it appears that by choosing to issue the 9t regulation pursuant to sec_7805 the commissioner did not issue the 9t regulation pursuant to a specific congressional delegation authority having the force and effect of law see tutor--saliba corp v commissioner supra pincite matheson v commissioner supra pincite n thus the 9t regulation is not entitled to chevron_deference it is only entitled to skidmore deference united_states v mead corp supra pincite pool co v cooper supra pincite v the majority opinion the majority relies on the pre-mead opinions of the u s courts of appeals for the fourth sixth seventh highth and ninth circuits to support its conclusion that the 9t regulation is valid majority op pp this is wrong as these cases were all decided pre-mead am fedn of govt employees afl-cio v veneman supra pincite hall v u s epa supra pincite n matz v household intl tax reduction inv plan supra pincite in judging the validity of the 9t regulation the majority accords an interpretive regulation considerable weight states that it will uphold interpretive regulations if they implement the congressional mandate in some reasonable manner applies the pre-mead analysis and gives the 9t regulation chevron_deference majority op pp in light of mead this analysi sec_1s improper additionally as is pointed out by judge thornton in his concurring opinion the majority relies on the joint_committee it also appears that the 9t regulation is not entitled to chevron_deference for another reason the 9t regulation did not go through notice-and-comment there is no evidence that it went through comparable formal administrative procedures and it remains in temporary form_15 years later 286_f3d_476 7th cir 279_f3d_614 8th cir 270_f3d_1137 7th cir revg 113_tc_329 190_f3d_791 7th cir revg tcmemo_1998_92 -- - staff summary even though the conference committee chose to adopt language less restrictive than the staff summary and on the blue_book even though the blue_book goes far beyond the language of the conference committee report to insert ideas from the staff summary that it previously suggested to the conference committee but which the conference committee rejected and even though the blue_book was published during the 100th congress while tra was enacted during the 99th congress majority op pp for the reasons stated in judge thornton’s concurring opinion our opinion in redlark and judge laro’s concurring opinion in redlark i find this reliance unpersuasive see also judge swift’s dissent p the majority acknowledges that sec_163 a does not compel the result contained in the 9t regulation but relies on the joint_committee staff summary and blue_book to conclude the 9t regulation is a permissible construction majority op pp this would be a slender reed on which to conclude that the 9t regulation has the power to persuade and is entitled to deference under skidmore v swift co supra especially in light of the acknowledgment that a reasonable interpretation of sec_163 a is that income_tax deficiency_interest attributable to nonemployee trade_or_business income should properly be considered allocable to a trade_or_business and that the pre-tra case law also supports this conclusion kikalos v commissioner f 3d pincite redlark v commissioner f 3d pincite redlark v commissioner t c pincite halpern j dissenting deference only sets the framework for judicial analysis it does not displace it 455_us_16 411_us_546 911_f2d_1128 5th cir the majority relies on courts of appeals opinions predating united_states v mead corp supra to analyze the validity of sec_1_163-9t temporary income_tax regs the majority’s analysis is incorrect therefore i respectfully dissent wells swift colvin and laro jj agree with this dissenting opinion