Court Opinion

ID: 2824553
Source: CourtListenerOpinion
Date Created: 2015-08-11 05:03:48.056735+00
Date Added: 2024-06-11T11:31:14.171142
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

BRUCE H. VOSS,                          No. 12-73257
              Petitioner-Appellant,
                                        Tax Ct. No.
                v.                       16443-09

COMMISSIONER OF INTERNAL
REVENUE,
            Respondent-Appellee.

CHARLES J. SOPHY,                       No. 12-73261
              Petitioner-Appellant,
                                        Tax Ct. No.
                v.                       16421-09

COMMISSIONER OF INTERNAL
REVENUE,                                    OPINION
            Respondent-Appellee.

            Appeal from a Decision of the
              United States Tax Court

                Argued and Submitted
        February 5, 2015—Pasadena, California

                 Filed August 7, 2015
2                           VOSS V. CIR

           Before: Michael J. Melloy,* Jay S. Bybee,
             and Sandra S. Ikuta, Circuit Judges.

                     Opinion by Judge Bybee;
                      Dissent by Judge Ikuta

                           SUMMARY**

                                 Tax

   The panel reversed a Tax Court decision involving the
debt limit provisions for unmarried co-owners seeking to
deduct mortgage interest for their qualified residence.

    The panel held that the debt limit provisions of 26 U.S.C.
§ 163(h)(3) apply on a per-taxpayer basis to unmarried co-
owners of a qualified residence. The panel remanded for
determination of the proper amount of interest that taxpayers
are entitled to deduct.

   Dissenting, Judge Ikuta would defer to the Internal
Revenue Service’s reasonable interpretation of an
ambiguous statute, which interpretation would limit
unmarried taxpayers in this situation to deducting the same
amount as married taxpayers filing jointly.

    *
  The Honorable Michael J. Melloy, Senior Circuit Judge for the U.S.
Court of Appeals for the Eighth Circuit, sitting by designation.
  **
     This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                         VOSS V. CIR                          3

                         COUNSEL

Emily J. Kingston (argued), Sideman & Bancroft LLP, San
Francisco, California; Aubrey Hone, Hone Maxwell LLP, San
Francisco, California, for Petitioners-Appellants.

Kathryn Keneally, Assistant Attorney General; Jonathan S.
Cohen, John Schumann (argued), Attorneys, United States
Department of Justice, Tax Division, Washington, D.C., for
Respondent-Appellee.

Shannon P. Minter, Christopher F. Stoll, National Center for
Lesbian Rights, San Francisco, California, for Amici Curiae
Professors of Law.

                          OPINION

BYBEE, Circuit Judge:

    This is a tax dispute brought by two unmarried co-owners
of real property, Bruce Voss and Charles Sophy. For the
2006 and 2007 tax years, Voss and Sophy each claimed a
home mortgage interest deduction under § 163(h)(3) of the
Internal Revenue Code, which allows taxpayers to deduct
interest on up to $1 million of home acquisition debt and
$100,000 of home equity debt. After an audit, the IRS
determined that Voss and Sophy were jointly subject to
§ 163(h)(3)’s $1 million and $100,000 debt limits and thus
disallowed a substantial portion of their claimed deductions.
Voss and Sophy challenged the IRS’s assessment in Tax
Court, arguing that the statute’s debt limits apply per taxpayer
such that they were entitled to deduct interest on up to $1.1
4                         VOSS V. CIR

million of home debt each. The Tax Court agreed with the
IRS.

    We are now called upon to decide how § 163(h)(3)’s debt
limit provisions apply when two or more unmarried co-
owners of a residence claim the home mortgage interest
deduction. Although the statute is silent as to unmarried co-
owners, we infer from the statute’s treatment of married
individuals filing separate returns that § 163(h)(3)’s debt
limits apply to unmarried co-owners on a per-taxpayer basis.
We accordingly reverse the decision of the Tax Court and
remand for a recalculation of petitioners’ tax liability.

                                 I

    Section 163 of the Internal Revenue Code governs the
deductibility of interest on a taxpayer’s indebtedness. This
section of the Tax Code, like much of the Code, is
complex—it requires attention to definitions within
definitions and exceptions upon exceptions. To assist the
reader, we begin with a brief overview of the section’s
relevant provisions.

      Section 163 begins with the general rule that interest on
indebtedness is deductible. See 26 U.S.C. § 163(a).
Subsection (h), however, provides that, “[i]n the case of a
taxpayer other than a corporation,” personal interest is not
deductible. See id. § 163(h)(1) (“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.”). Nevertheless, “personal interest” is defined
rather technically as “any interest allowable as a deduction
. . . other than” certain specified categories of interest. See id.
§ 163(h)(2). One of those carved-out categories is “any
                        VOSS V. CIR                        5

qualified residence interest (within the meaning of paragraph
(3)).” Id. § 163(h)(2)(D).

    Section 163(h)(3) thus provides that interest on a
“qualified residence” is not “personal interest” and,
accordingly, may be deducted by taxpayers who are not
corporations. The Code defines “qualified residence” as the
taxpayer’s principal residence and “1 other residence of the
taxpayer which is selected by the taxpayer for purposes of
this subsection for the taxable year and which is used by the
taxpayer as a residence.” Id. § 163(h)(4)(A)(i).

    “Qualified residence interest” encompasses interest
payments on two types of debt: acquisition indebtedness and
home equity indebtedness. Id. § 163(h)(3)(A). “Acquisition
indebtedness” generally means debt incurred in, or that
results from the refinancing of debt incurred in, “acquiring,
constructing, or substantially improving” a qualified
residence.       Id. § 163(h)(3)(B)(i).       “Home equity
indebtedness” generally means indebtedness, other than
acquisition indebtedness, that is secured by a qualified
residence and that does not exceed the difference between the
amount of acquisition indebtedness and the home’s fair
market value. Id. § 163(h)(3)(C)(i). A home equity line of
credit is a typical example of home equity indebtedness. So,
for example, if a taxpayer has a purchase money mortgage (or
the refinancing of such a mortgage) on both a primary home
and a summer home, she can deduct interest payments on
both mortgages. She may also deduct the interest on any
home equity line of credit on both residences.

   Significantly, the statute does not allow taxpayers to
deduct interest payments on an unlimited amount of
acquisition and home equity indebtedness. Instead, the
6                           VOSS V. CIR

statute limits “[t]he aggregate amount treated as acquisition
indebtedness for any period” to $1,000,000 and “[t]he
aggregate amount treated as home equity indebtedness for
any period” to $100,000. Id. § 163(h)(3)(B)(ii), (C)(ii). “[I]n
the case of a married individual filing a separate return,”
however, the statute reduces the debt limits to $500,000 and
$50,000. Id. We shall refer to these provisions as the debt
limit provisions.

    If a taxpayer’s total mortgage debt exceeds the debt
limits, a Treasury regulation, 26 C.F.R. § 1.163-10T, provides
the method for calculating qualified residence interest.
Subsection (e) of that regulation sets out the usual method:
qualified residence interest is calculated by multiplying the
total interest paid by the ratio of the applicable debt limit over
the total debt. See id. § 1.163-10T(e). For example, if a
single individual has a $2 million mortgage and a $200,000
home equity line of credit, the ratio is 50%: $1.1 million (the
total applicable debt limit under the statute) over $2.2 million
(the total debt). Thus, the taxpayer is entitled to deduct 50%
of whatever interest is paid or accrued during her taxable
year.1

    In sum, under § 163 and the applicable Treasury
regulation, a taxpayer may deduct the interest paid on a
mortgage or home equity line of credit for a principal
residence and a second home. For taxpayers other than
married individuals filing a separate return, the deduction is
limited to interest paid on $1 million of mortgage debt and
$100,000 of home equity debt. If the taxpayer’s home
indebtedness exceeds $1.1 million, then she is entitled to

  1
    The regulation is silent as to how the deduction should be calculated
in co-owner situations.
                          VOSS V. CIR                           7

deduct a portion of her interest, determined by the ratio of the
statutory debt limit divided by her total actual debt. If the
taxpayer is married filing a separate return, the debt limit is
$550,000.

    Although the statute is specific with respect to a married
taxpayer filing a separate return, the Code does not specify
whether, in the case of residence co-owners who are not
married, the debt limits apply per residence or per taxpayer.
That is, is the $1.1 million debt limit the limit on the qualified
residence, irrespective of the number of owners, or is it the
limit on the debt that can be claimed by any individual
taxpayer? That gap in the Code is the source of the present
controversy.

                                II

                               A

    Bruce Voss and Charles Sophy are domestic partners
registered with the State of California. They co-own two
homes as joint tenants—one in Rancho Mirage, California
and the other, their primary residence, in Beverly Hills,
California.

    When Voss and Sophy purchased the Rancho Mirage
home in 2000, they took out a $486,300 mortgage, secured by
the property. Two years later, they refinanced that mortgage
and obtained a new mortgage, also secured by the property,
in the amount of $500,000. Voss and Sophy are jointly and
severally liable for the refinanced Rancho Mirage mortgage.

   Voss and Sophy purchased the Beverly Hills home in
2002. They financed the purchase of the Beverly Hills home
8                       VOSS V. CIR

with a $2,240,000 mortgage, secured by the Beverly Hills
property. About a year later, they refinanced the mortgage by
obtaining a new loan in the amount of $2,000,000. Voss and
Sophy are jointly and severally liable for the refinanced
Beverly Hills mortgage, which, like the original mortgage, is
secured by the Beverly Hills property. At the same time as
they refinanced the Beverly Hills mortgage, Voss and Sophy
also obtained a home equity line of credit of $300,000 for the
Beverly Hills home. Voss and Sophy are jointly and
severally liable for the home equity line of credit as well.

    The total average balance of the two mortgages and the
line of credit in 2006 and 2007 (the two taxable years at
issue) was about $2.7 million—$2,703,568.05 in 2006 and
$2,669,135.57 in 2007. Thus, whether § 163(h)(3)’s debt
limit provisions are interpreted as applying per taxpayer (such
that Voss and Sophy can deduct interest on up to $2.2 million
of debt) or per residence (such that Voss and Sophy can
deduct interest on up to $1.1 million of debt), it is in either
event clear that Voss and Sophy’s debt exceeds the statutory
debt limits.

                              B

    Voss and Sophy each filed separate federal income tax
returns for taxable years 2006 and 2007. In their respective
returns, Voss and Sophy each claimed home mortgage
interest deductions for interest paid on the two mortgages and
the home equity line of credit. The parties agree on the
amounts of interest Voss and Sophy each paid for those years:
Voss paid $85,962.30 in 2006 and $76,635.08 in 2007, and
Sophy paid $94,698.33 in 2006 and $99,901.35 in 2007. The
total interest paid was $180,660.63 in 2006 and $176,536.43
in 2007.
                        VOSS V. CIR                         9

    On their respective 2006 returns, Voss and Sophy each
claimed a home mortgage interest deduction of $95,396, for
a total of $190,792. Voss and Sophy now agree that this was
at least $10,131.37 too much because Voss and Sophy
together only paid $180,660.63 in interest that year. The
additional amount represents interest that Voss paid on
December 31, 2005, and was thus not deductible by either
Voss or Sophy for taxable year 2006. For taxable year 2007,
Voss and Sophy claimed less mortgage interest than they
actually paid—Voss claimed a deduction of $88,268, and
Sophy claimed a deduction of $65,614.

    The IRS audited the 2006 and 2007 returns and, in 2009,
assessed notices of deficiency to Voss and Sophy. The IRS
calculated each petitioner’s mortgage interest deduction by
applying a limitation ratio to the total amount of mortgage
interest that each petitioner paid in each taxable year. The
limitation ratio was the same for both Voss and Sophy: $1.1
million ($1 million of home acquisition debt plus $100,000 of
home equity debt) over the entire average balance, for each
taxable year, on the Beverly Hills mortgage, the Beverly Hills
home equity line of credit, and the Rancho Mirage mortgage.

    Using that method, the IRS concluded that Voss was
allowed to deduct $34,975 in 2006 and $31,583 in 2007. The
IRS thus disallowed $60,421 of Voss’s claimed deduction in
2006 and $56,685 of his claimed deduction in 2007. The IRS
also found Sophy’s returns deficient. The IRS concluded that
Sophy was allowed to deduct $38,530 in 2006 and $41,171 in
2007. The IRS thus disallowed $56,866 of Sophy’s claimed
deduction in 2006 and $24,443 of his claimed deduction in
2007.
10                            VOSS V. CIR

                                    C

    Voss and Sophy each filed a petition with the Tax Court,
and the two cases were consolidated for joint consideration.
The Tax Court granted the parties’ joint motion to submit the
cases for decision without trial and on the basis of stipulated
facts and exhibits, and directed the parties to submit proposed
computations for entry of decision.

    Based on the stipulated facts, exhibits, and proposed
computations submitted by the parties, the Tax Court reached
a decision and issued an opinion in the IRS’s favor. The Tax
Court framed the question presented as “whether the statutory
limitations on the amount of acquisition and home equity
indebtedness with respect to which interest is deductible
under section 163(h)(3) are properly applied on a per-
residence or per-taxpayer basis when residence co-owners are
not married to each other.” Sophy v. Comm’r, 138 T.C. 204,
209 (2012).

    The Tax Court began its analysis by looking to the
definitions of acquisition indebtedness and home equity
indebtedness in § 163(h)(3)(B)(i) and (C)(i).2 Id. at 210. The
Tax Court noted that the term “any indebtedness” in both
definitions is not qualified by language relating to an

  2
    “Acquisition indebtedness” is defined as “any indebtedness which (I)
is incurred in acquiring, constructing, or substantially improving any
qualified residence of the taxpayer, and (II) is secured by such residence.”
26 U.S.C. § 163(h)(3)(B)(i). “Home equity indebtedness” is defined as
“any indebtedness (other than acquisition indebtedness) secured by a
qualified residence to the extent the aggregate amount of such
indebtedness does not exceed (I) the fair market value of such qualified
residence, reduced by (II) the amount of acquisition indebtedness with
respect to such residence.” Id. § 163(h)(3)(C)(i).
                             VOSS V. CIR                               11

individual taxpayer (as in “any indebtedness of the
taxpayer”). Id. The Tax Court also pointed out that the
phrase “of the taxpayer” in the definition of acquisition
indebtedness “is used only in relation to the qualified
residence [as in “qualified residence of the taxpayer”], not the
indebtedness.” Id.

    The Tax Court then examined the definition of qualified
residence interest.3 Id. The Tax Court noted that the phrase
“with respect to any qualified residence” in that definition
appeared to be superfluous, as acquisition indebtedness and
home equity indebtedness were already defined in relation to
a qualified residence. Id. at 211. The Tax Court nevertheless
found that the phrase was not superfluous because, in its
view, “Congress used these repeated references to emphasize
the point that qualified residence interest and the related
indebtedness limitations are residence focused rather than
taxpayer focused.” Id. at 212.

    The Tax Court further reasoned that the married-person
parentheticals were consistent with its per-residence
interpretation, as the parentheticals made clear that married
couples—whether filing separately or jointly—are, as a
couple, limited to deducting interest on $1 million of
acquisition indebtedness and $100,000 of home equity
indebtedness. Id. The purpose of the parentheticals, the Tax
Court explained, was simply

 3
   “Qualified residence interest” is defined as “any interest which is paid
or accrued during the taxable year on . . . acquisition indebtedness [or
home equity indebtedness] with respect to any qualified residence of the
taxpayer.” Id. § 163(h)(3)(A).
12                       VOSS V. CIR

        to set out a specific allocation of the limitation
        amounts that must be used by married couples
        filing separate tax returns, thus implying that
        co-owners who are not married to one another
        may choose to allocate limitation amounts
        among themselves in some other manner,
        such as according to percentage of ownership.

Id. at 213.

    Noting that nothing in the legislative history of
§ 163(h)(3) suggested any contrary intention, the Tax Court
concluded that “the limitations in section 163(h)(3)(B)(ii) and
(C)(ii) on the amounts that may be treated as acquisition and
home equity indebtedness with respect to a qualified
residence are properly applied on a per-residence basis.” Id.

    We have jurisdiction to review the decisions of the Tax
Court “in the same manner and to the same extent as
decisions of the district courts in civil actions tried without a
jury.” 26 U.S.C. § 7482(a)(1). Accordingly, we review the
Tax Court’s factual findings for clear error, and we review
the Tax Court’s conclusions of law—including its
interpretation of the Internal Revenue Code—de novo.
Suzy’s Zoo v. Comm’r, 273 F.3d 875, 878 (9th Cir. 2001).

                               III

    We are asked to decide an issue of first impression:
When multiple unmarried taxpayers co-own a qualifying
residence, do the debt limit provisions found in 26 U.S.C.
§ 163(h)(3)(B)(ii) and (C)(ii) apply per taxpayer or per
                             VOSS V. CIR                              13

residence? We conclude that § 163(h)’s debt limits apply per
taxpayer.4

                                   A

    We begin with the text of the key provisions at
issue—§ 163(h)(3)’s debt limit provisions. They provide:

         (B) Acquisition indebtedness.—

             ...

             (ii) $1,000,000 Limitation.—The
         aggregate amount treated as acquisition
         indebtedness for any period shall not exceed
         $1,000,000 ($500,000 in the case of a married
         individual filing a separate return).

         (C) Home equity indebtedness.—

             ...

             (ii) Limitation.—The aggregate amount
         treated as home equity indebtedness for any
         period shall not exceed $100,000 ($50,000 in

   4
      The parties agree that both of petitioners’ homes are qualified
residences under § 163(h)(4)(A)(i), that both refinanced mortgages qualify
as acquisition indebtedness under § 163(h)(3)(B)(i), and that petitioners’
home equity line of credit qualifies as home equity indebtedness under
§ 163(h)(3)(C)(i).
14                           VOSS V. CIR

         the case of a separate return by a married
         individual).

Id. § 163(h)(3)(B)(ii), (C)(ii).

    The parties dispute whether the $1 million and $100,000
debt limits in these provisions apply per taxpayer or per
residence. If they apply per taxpayer, then Voss and Sophy
are each entitled to a $1.1 million debt limit, such that
together they can deduct interest payments on up to $2.2
million of acquisition and home equity debt. If the debt limit
provisions apply per residence, as the Tax Court held, then
the $1 million and $100,000 debt limits must be divided up in
some way between Voss and Sophy.

    Discerning an answer from § 163(h) requires considerable
effort on our part because the statute is silent as to how the
debt limits should apply in co-owner situations.5 Both
provisions limit “[t]he aggregate amount treated” as
acquisition or home equity debt, but neither says to whom or
what the limits apply. Had Congress wanted to make clear
that the debt limits apply per taxpayer, it could have drafted
the provisions to limit “the aggregate amount each taxpayer
may treat as” acquisition or home equity debt. But it did not.
Or, had Congress wanted to make clear that the debt limits
apply per residence, it could have provided that the debt
limits must be divided or allocated in the event that two or

 5
   The relevant Treasury regulation, 26 C.F.R. § 1.163-10T, is also silent
in this regard. The regulation provides a method of calculating qualified
residence interest when the home debt exceeds the applicable debt limits
in the statute, see id. § 1.163-10T(e), but it says nothing about how
qualified residence interest should be calculated when there are multiple
co-owners, whether married or unmarried.
                             VOSS V. CIR                               15

more unmarried individuals co-own a qualified residence. Cf.
26 U.S.C. § 36(a)(1)(C) (“If two or more individuals who are
not married purchase a principal residence, the amount of the
[first-time homebuyer] credit allowed . . . shall be allocated
among such individuals in such manner as the Secretary may
prescribe, except that the total amount of the credits allowed
to all such individuals shall not exceed $8,000”). But, again,
it did not.

     Although Congress did neither of these things, we are not
altogether without textual guidance. The statute is mostly
silent about how to deal with co-ownership situations, but it
is not entirely silent. Both debt limit provisions contain a
parenthetical that speaks to one common situation of co-
ownership: married individuals filing separate returns. See
id. § 163(h)(3)(B)(ii), (C)(ii). The parentheticals provide
half-sized debt limits “in the case of a married individual
filing a separate return.” Id.6 Congress’s use of the phrase
“in the case of” is important. It suggests, first, that the
parentheticals contain an exception to the general debt limit
set out in the main clause, not an illustration of how that
general debt limit should be applied. At the same time, the
phrase “in the case of” also suggests a certain parallelism
between the parenthetical and the main clause of each
provision: other than the debt limit amount, which differs, we
can expect that in all respects the case of a married individual
filing a separate return should be treated like any other case.
It is thus appropriate to look to the parentheticals when
interpreting the main clauses’ general debt limit provisions.
These parentheticals offer us at least three useful insights.

   6
    For no apparent reason that we can tell, (C)(ii)’s parenthetical is
worded differently. It states, “$50,000 in the case of a separate return by
a married individual.” 26 U.S.C. § 163(h)(3)(C)(ii) (emphasis added).
16                       VOSS V. CIR

     First, the parentheticals clearly speak in per-taxpayer
terms: the limit on acquisition indebtedness is “$500,000 in
the case of a married individual filing a separate return,” id.
§ 163(h)(3)(B)(ii) (emphasis added), and the limit on home
equity indebtedness is “$50,000 in the case of a separate
return by a married individual,” id. § 163(h)(3)(C)(ii)
(emphasis added). And they speak in such terms even though
married individuals commonly (and perhaps usually) co-own
their homes and are jointly and severally liable on any
mortgage debt.         Had Congress wanted to draft the
parentheticals in per-residence terms, doing so would not
have been particularly difficult. Congress could have written,
“in the case of any qualified residence of a married individual
filing a separate return.” Yet, once again, Congress did not
draft the statute in that way. The per-taxpayer wording of the
parentheticals, considered in light of the parentheticals’ use
of the phrase “in the case of,” thus suggests that the wording
of the main clause—in particular, the phrase “aggregate
amount treated”—should likewise be understood in a per-
taxpayer manner.

     Second, the parentheticals don’t just speak in per-taxpayer
terms; they operate in a per-taxpayer manner. The
parentheticals give each separately filing spouse a separate
debt limit of $550,000 so that, together, the two spouses are
effectively entitled to a $1.1 million debt limit (the normal
limit for single taxpayers). They do not subject both spouses
jointly to the $550,000 debt limit specified in the statute.
Were the parentheticals to work in that way, the result would
be quite anomalous. Rather than ensuring that a married
couple filing separate returns is treated the same as a couple
filing a joint return, the parentheticals, under a per-residence
reading, would result in disparate treatment of married
couples filing separate returns. The separately filing couple
                              VOSS V. CIR                               17

would have a $550,000 debt limit, whereas the jointly filing
couple, and even the single individual, would have a $1.1
million debt limit.7

     This is surely not what the statute intended, and we don’t
understand the Tax Court or the IRS to say otherwise. Quite
to the contrary, both acknowledge that the parentheticals’
lower limits apply per spouse—which is just another way of
saying per taxpayer. See Sophy, 138 T.C. 212 (interpreting
the married-person parentheticals to mean that “married
taxpayers who file separate returns are limited to acquisition
indebtedness of $500,000 each” and “to home equity
indebtedness of $50,000 each” (emphasis added)); see also
Bronstein v. Comm’r, 138 T.C. 382, 386 (2012) (“[T]he
parenthetical indebtedness limitations of section
163(h)(3)(B)(ii) and (C)(ii) are $550,000 for each spouse
filing a separate return.” (emphasis added)). And if the debt
limits for spouses filing separately apply per spouse, we see
no reason in the statute why the debt limits for unmarried
individuals should not apply per unmarried individual.8 The

 7
  See Pau v. Comm’r, 73 T.C.M. 1819, 1826 (1997) (holding that
a married couple filing a joint return can deduct “interest paid on $1
million of acquisition indebtedness”).
     8
    The dissent does not disagree with this logic. See Dissent at 46–47
(noting that if the married-person parenthetical were interpreted in a per-
taxpayer manner, “married taxpayers filing separately would deduct the
same amount of interest as married taxpayers filing jointly”). Instead, the
dissent attacks our premise—i.e., that the married-person parenthetical
operates per taxpayer, not per residence. See id. at 47–49 (interpreting the
married-person parenthetical as imposing a “penalty on married
individuals for filing separately” by limiting separately filing spouses to
a combined debt limit of $550,000). As we have explained, however, the
dissent’s view runs contrary not only to the statute’s text (“in the case of
18                          VOSS V. CIR

per-taxpayer operation of the debt limits for married
individuals filing separately thus suggests that the general
debt limits also operate per taxpayer.

    Third, and finally, the very inclusion of the parentheticals
suggests that the debt limits apply per taxpayer. “It is a well-
established rule of statutory construction that courts should
not interpret statutes in a way that renders a provision
superfluous.” Chubb Custom Ins. Co. v. Space Sys./Loral,
Inc., 710 F.3d 946, 966 (9th Cir. 2013), cert. denied, 134 S.
Ct. 906 (2014). If the $1.1 million debt limit truly applied per
residence, as the Tax Court held it does, the parentheticals
would be superfluous, as there would be no need to provide
that two spouses filing separately get $550,000 each. If the
$1.1 million debt limit applies per taxpayer, by contrast, the
parentheticals actually do something: they give each
separately filing spouse half the debt limit so that the
separately filing couple is, as a unit, subject to the same debt
limit as a jointly filing couple.

    The Tax Court interpreted the married-person
parentheticals differently. The purpose of the parentheticals,
according to the Tax Court, is not to lower the debt limits for
spouses filing separate returns—the spouses are already
jointly subject to the $1.1 million debt limit. Rather, the Tax
Court explained,

         this language simply appears to set out a
         specific allocation of the limitation amounts
         that must be used by married couples filing
         separate tax returns, thus implying that co-

a married individual filing a separate return”) but also to the IRS’s own
uncontested interpretation of the statute.
                         VOSS V. CIR                         19

       owners who are not married to one another
       may choose to allocate the limitation amounts
       among themselves in some other manner,
       such as according to percentage of ownership.

Sophy, 138 T.C. 213 (emphasis added).

     We find this interpretation unpersuasive. In particular, we
think it unlikely that Congress would go out of its way to
prevent spouses (and only spouses) from allocating
§ 163(h)(3)’s debt limit amounts, especially when in most
cases spouses presumably own their home as equal partners.
The much more likely intent of the parentheticals, we think,
is to ensure that married couples filing a separate return are
treated the same, for purposes of § 163(h)(3), as married
couples filing a joint return—in other words, to ensure that all
married couples, not just joint filers, are treated as though
they were a single taxpayer.

    Section 163(h)(3) is not the only provision in the Tax
Code that does this. Congress has on a number of occasions
provided half-sized deductions, credits, or limits for
separately filing spouses. See, e.g., 26 U.S.C. § 22(c)(2)(A)
(providing an initial credit of $7,500 to a qualifying married
couple filing jointly and “$3,750 in the case of a married
individual filing a separate return”), id. § 1202(b) (providing
that, for purposes of the Code’s exclusion for gain from
certain small business stock, the $10 million limitation on
eligible gain is reduced to $5 million “[i]n the case of a
separate return by a married individual”), id. § 1211(b)
(limiting allowable net capital losses to “$3,000 ($1,500 in
the case of a married individual filing a separate return)”).
20                            VOSS V. CIR

    The purpose of these provisions is obvious. In each
provision, each taxpayer gets some tax benefit—a credit, an
exclusion up to some limit, allowable losses up to some limit,
or, here, a deduction on interest on home debt up to some
limit. Congress, knowing that joint filers are treated as a
single taxpayer and that separate filers are treated as two
separate taxpayers, wants to ensure that the separately filing
spouses don’t get double the benefit that jointly filing couples
get. And so, in each of these provisions, Congress provides
that separately filing spouses each get half the benefit. The
intent of these provisions is not to prevent separately filing
spouses from allocating the benefit; it is to ensure that the
separately filing spouses don’t get double the credit, the
exclusion, the losses, or the debt limit that the jointly filing
couple gets.9

    If Congress wants to go further and ensure that two or
more unmarried taxpayers are treated as a single taxpayer for
purposes of a particular deduction or credit, it can do that too.
And it has. Take § 36 of the Tax Code, for example. That
section sets an $8,000 limit on the first-time homebuyer
credit but adds two caveats. See id. § 36(b)(1). The first
caveat is very similar to (and, indeed, has much of the same
language as) the limitation provisions here. The statute
states, “In the case of a married individual filing a separate

  9
    That said, Congress usually accomplishes this purpose by giving each
spouse half the tax benefit that the jointly filing couple gets. That may
mean that if a married couple has a large mortgage and files separate
returns, but only one spouse seeks the benefit, the couple may, all counted,
only get half the benefit it would have received had the couple filed
jointly. See, e.g., Bronstein, 138 T.C. 384, 386 (holding that the clear
language of § 163(h)(3) limited a spouse filing a separate return to
$550,000 of debt even though she paid all of the mortgage interest and her
husband was unable to seek the deduction).
                        VOSS V. CIR                         21

return, subparagraph (A) [the provision containing the $8,000
cap] shall be applied by substituting ‘$4,000’ for ‘$8,000.’”
Id. § 36(b)(1)(B). But, unlike the limitation provisions here,
§ 36 does not stop there. It has an additional provision—the
second caveat—which states:

       If two or more individuals who are not
       married purchase a principal residence, the
       amount of the credit allowed . . . shall be
       allocated among such individuals in such
       manner as the Secretary may prescribe, except
       that the total amount of the credits allowed to
       all such individuals shall not exceed $8,000.

Id. § 36(b)(1)(C) (emphasis added).

     As § 36 makes clear, Congress knows how to treat a
group of unmarried taxpayers as a single taxpayer for
purposes of a particular tax benefit or burden. Congress
could have done so here, but tellingly it did not. Instead,
Congress did what it has done many times before, using the
same language it has used before: It eliminated what would
otherwise be a significant discrepancy between separately
filing and jointly filing married couples by expressly reducing
the debt limits for spouses filing separately.

    In sum, the married-person parentheticals’ language,
purpose, and operation all strongly suggest that § 163(h)(3)’s
debt limit provisions apply per taxpayer, not per residence.
Absent some contrary indication in the statute, then, we shall
read the debt limit provisions as applying on a per-taxpayer
basis.
22                       VOSS V. CIR

                               B

    The Tax Court rejected a per-taxpayer reading of the debt
limit provisions because it discerned in § 163(h)(3) a general
“focus” on the qualified residence, Sophy, 138 T.C. 210,
and a “conspicuous[] absen[ce]” of “any reference to an
individual taxpayer,” id. at 211. Because the debt limit
provisions do not speak directly to the situation of unmarried
co-owners, it was reasonable for the Tax Court to look
beyond those provisions in an effort to understand how the
provisions should be applied. Ultimately, however, these
other provisions of the statute do not sway us.

    The Tax Court focused on three provisions in the statute,
all definitions: first, the definition of qualified residence
interest as “any interest which is paid or accrued during the
taxable year on[] acquisition [or home equity] indebtedness
with respect to any qualified residence of the taxpayer,” 26
U.S.C. § 163(h)(3)(A) (emphasis added); second, the,
definition of acquisition indebtedness as “any indebtedness
which[] is incurred in acquiring, constructing, or substantially
improving any qualified residence of the taxpayer,” id.
§ 163(h)(3)(B)(i) (emphasis added); and third, the definition
of home equity indebtedness as “any indebtedness (other than
acquisition indebtedness) secured by a qualified residence,”
id. § 163(h)(3)(C)(i) (emphasis added). Sophy, 138 T.C.
210–11. In each definition, the Tax Court highlighted the
reference to the qualified residence and noted that the
taxpayer was only ever mentioned with respect to the
residence, not with respect to the indebtedness. Id.

    We, however, do not find the statute’s focus on the
residence or lack of focus on the taxpayer particularly
compelling. As for the repeated references to the residence,
                              VOSS V. CIR                                23

it is only natural that a statute providing a deduction on
“qualified residence interest” will focus on indebtedness with
respect to a qualified residence. Indeed, for the most part, the
statute’s references to the “qualified residence” are entirely
necessary; take those references out, and the statute would
change meaning or make little sense.

    The Tax Court did identify a few instances where a
prepositional phrase involving the residence (such as “with
respect to any qualified residence”) could have been safely
omitted and was thus arguably superfluous, id. at 211–12, but
the same could be said of other prepositional phrases
involving the taxpayer (such as “of the taxpayer”).10 In all
likelihood, these phrases, though technically unnecessary,
were included simply to ease the reader’s understanding of a
complex tax statute full of technical definitions. (We
certainly appreciate their inclusion.) And, in any case, if
there is a plausible inference to be drawn from those few
stray prepositional phrases, it is overcome by the clear
implications of the married-person parentheticals discussed
above. Thus, in our view the statute’s focus on the residence

  10
     The statute’s definition of qualified residence interest is instructive.
The statute defines that term to include interest on “acquisition
indebtedness with respect to any qualified residence of the taxpayer.” 26
U.S.C. § 163(h)(3)(A)(i) (emphasis added). As the Tax Court pointed out,
Sophy, 138 T.C. 211, the phrase “with respect to any qualified
residence” appears to be redundant because acquisition indebtedness is
defined as indebtedness “incurred in acquiring . . . any qualified residence
of the taxpayer,” 26 U.S.C. § 163(h)(3)(B)(i) (emphasis added). Notably,
however, the phrase “of the taxpayer” is also unnecessary because
qualified residence is defined as “the principal residence . . . of the
taxpayer” and “[one] other residence of the taxpayer.”                    Id.
§ 163(h)(4)(A)(i) (emphasis added). Indeed, “of the taxpayer” is twice
redundant: it is unnecessarily included in both the definition of qualified
residence interest and the definition of acquisition indebtedness.
24                       VOSS V. CIR

says little about how the debt limit provisions should be
applied.

     Nor do we find the occasional omission of the word
“taxpayer” particularly telling. To begin with, two of the
three definitions identified by the Tax Court do refer to the
taxpayer, and all three depend on the definition of “qualified
residence,” which itself refers to the taxpayer (for more on
the definition of “qualified residence,” see the next section
below). Setting to the side those references to the taxpayer,
it is true that the three definitions identified by the Tax
Court—just like the debt limit provisions in (h)(3)(B)(ii) and
(C)(ii)—do not specify who paid the interest, who incurred
the indebtedness, and whose indebtedness was secured by a
qualified residence. But when we look at the rest of § 163
(and, we suspect, the rest of the Tax Code), the omission of
the word “taxpayer” is anything but conspicuous. Note, for
example, how the word “taxpayer” is missing from the first
line of § 163, which states, “There shall be allowed as a
deduction all interest paid or accrued within the taxable year
on indebtedness.” Id. § 163(a). There is no need for the
sentence to say, “There shall be allowed as a deduction to the
taxpayer all interest paid by the taxpayer within the
taxpayer’s taxable year on the taxpayer’s indebtedness.” Any
reasonable reader would understand that the statute is
speaking of a taxpayer.

    Or take the first line of § 163(h). It states that “no
deduction shall be allowed under this chapter for personal
interest paid or accrued during the taxable year.” Id.
§ 163(h)(1). Again, the reader easily intuits that the statute
refers to a taxpayer’s deduction, a taxpayer’s personal interest
payments, and a taxpayer’s taxable year. Indeed, there can be
no doubt that is what (h)(1) means because the statement just
                        VOSS V. CIR                         25

quoted follows the phrase, “In the case of a taxpayer other
than a corporation.” Id. (emphasis added).

    Thus, although we do not fault the Tax Court for looking
to other provisions in the statute for guidance, we would
place little weight on the statute’s general focus on the
residence or its repeated omission of reference to the
taxpayer. If anything, these other provisions reinforce our
per-taxpayer reading; they reveal that the debt limit
provisions’ omission of the word “taxpayer” is actually quite
ordinary in the context of the broader statute.

                              C

   Not only does nothing in the statute compel the Tax
Court’s per-residence reading; several of the statute’s
provisions point the other way. We have already noted one
example: by speaking and operating in a per-taxpayer
manner, the married-person parentheticals suggest that the
general debt limits also apply per taxpayer. Two other
provisions also warrant attention.

    First, we are guided by the statute’s repeated references
to a single “taxable year.” Section 163(h) begins by stating
that “no deduction shall be allowed under this chapter for
personal interest paid or accrued during the taxable year.” Id.
§ 163(h)(1) (emphasis added). Likewise, § 163(h)(3) begins
by defining qualified residence interest as any interest on
acquisition or home equity debt “which is paid or accrued
during the taxable year.” Id. § 163(h)(3)(A). Indeed, the
very provisions at issue, the debt limit provisions, cap the
allowable amount of home debt “for any period”—the word
“period” clearly referring to the “taxable year” mentioned
earlier in (h)(3). Id. § 163(h)(3)(B)(ii), (C)(ii).
26                      VOSS V. CIR

    Residences do not have taxable years; only taxpayers do.
And, importantly, taxpayers can have different taxable years.
See 26 U.S.C. § 441(b) (providing that a taxpayer’s taxable
year may vary depending on the taxpayer’s annual accounting
period). Yet § 163(h) speaks in terms of a single taxable
year, thus implying that the debt limits apply per taxpayer. If
Congress truly intended to imply that § 163(h)(3)’s debt
limits apply per residence by broadly focusing on the
residence and consistently ignoring the taxpayer, it seems
unlikely to us that it would at the same time define qualified
residence interest with respect to a single taxable year.

    Moreover, it is unclear how co-owners with different
taxable years could even determine “[t]he aggregate amount
treated as acquisition indebtedness for any period” under a
per-residence approach. Does one co-owner’s tax period
control? Or do the co-owners have to figure out some way of
accounting for both tax periods? (Keep in mind that
mortgage balances usually change monthly.) These difficult
questions go away, however, when the debt limits are read to
apply per taxpayer. Each co-owner simply determines the
interest paid and the average mortgage debt during his or her
own tax period.

    The Tax Court’s per-residence reading is also hard to
square with the statute’s definition of “qualified residence.”
Somewhat counter-intuitively, the term “qualified residence”
can include one or two residences: “the principal residence
(within the meaning of section 121) of the taxpayer,” and “1
other residence of the taxpayer which is selected by the
taxpayer for purposes of this subsection for the taxable year
and which is used by the taxpayer as a residence (within the
meaning of section 280A(d)(1)).” Id. § 163(h)(4)(A)(i).
Contrary to the Tax Court’s per-residence reading of the
                        VOSS V. CIR                         27

statute, the term “qualified residence” clearly focuses on the
taxpayer. The term includes the principal residence “of the
taxpayer” and one other residence “of the taxpayer” that is
“used by the taxpayer as a residence” and is “selected by the
taxpayer.” Id. The term also specifies that the taxpayer may
select the secondary residence “for the taxable year,” id.,
suggesting that a taxpayer who owns multiple secondary
residences can change his or her “1 other residence” from one
tax year to the next.

    More than just focusing on the taxpayer, the term
“qualified residence” also highlights the impracticality of the
Tax Court’s approach. As the term “qualified residence” is
defined, it is entirely possible that two residence co-owners
might each have a different “qualified residence.” For
example, two individuals might each have a separate primary
residence but go in together on a vacation home in Maui. For
such co-owners, filing tax returns under the Tax Court’s per-
residence approach would be like running a three-legged race.
The co-owners are tied together for one home but not the
other. This would mean that the two (or it could be three or
four) co-owners would have to coordinate their tax returns to
ensure that the aggregate amount of acquisition debt for each
taxpayer’s “qualified residence” does not exceed $1 million.
It would also mean that one co-owner’s deduction might
depend on the size of another co-owner’s mortgage on a
home in which the first co-owner has no interest. Under a
per-taxpayer approach, by contrast, determining the amount
of acquisition debt is free of such difficulties. Each taxpayer
can calculate the deduction with reference to his or her
respective two residences.

   These provisions—the married-person parentheticals, the
repeated references to the single “taxable year,” and the
28                            VOSS V. CIR

taxpayer-specific definition of “qualified residence”—are at
odds with the Tax Court’s per-residence reading of
§ 163(h)(3). Each provision focuses on the individual
taxpayer, and the impracticality of applying the provisions
under a per-residence approach suggests that Congress never
intended that approach. We thus conclude that a per-taxpayer
reading of the statute’s debt limit provisions is most
consistent with § 163(h)(3) as a whole.11

                                    IV

   The IRS argues that applying § 163(h)(3)’s debt limit
provisions on a per-taxpayer basis creates a marriage penalty.
We agree that it does, but we do not believe the marriage
penalty is as significant a concern as the IRS urges.

  11
    As the Treasury regulation’s formula set out in 26 C.F.R. § 1.163-
10T(e) only addresses the situation of a single taxpayer, the formula may
need to be adjusted to account for the situation of separately filing co-
owners, whether married or unmarried. See Dissent at 47 (suggesting that,
if married individuals filing separately are to receive the same combined
debt limit as a married couple filing jointly, the IRS would presumably
have to “allow [each] married taxpayer filing separately to deduct his or
her own interest payments on the debt in the proportion of $550,000
divided by one half of the total debt secured by the qualified residence”).
We leave it to the IRS to develop in the first instance a workable
methodology for separately filing co-owners.

     The dissent also disputes our conclusion that the regulation fails to
address the situation presented here, relying on the IRS’s conclusion “that
the regulation does apply to co-owners.” Dissent at 38 n.1 (citing IRS
CCA 200911007, 2009 WL 641772). But whether the IRS has interpreted
its own regulation in this manner is of little import where its reasoning for
doing so is a short-shrift interpretation of a statute in an opinion lacking
the force of law. See Maj. Op. at 31–32.
                         VOSS V. CIR                          29

     Congress may have had perfectly legitimate reasons for
distinguishing between married and unmarried taxpayers.
Married individuals, unlike unmarried individuals, have the
option under the Tax Code of filing a joint return. This
option offers significant benefits—in particular, lower tax
rates at various levels of income. But it’s not all honeymoon;
filing jointly also comes with certain drawbacks. A couple
filing a joint return might, for example, receive one $1,000
tax credit where the same couple filing separate tax returns
might receive two $1,000 credits. It would appear that, in
Congress’s view, the home mortgage interest deduction is one
such drawback. If two individuals who are engaged to be
married each own their own house and each have their own
$1 million mortgage, both get to deduct all of their interest.
But if they get married and file a joint return, they are treated
as one taxpayer and can then only deduct half of their interest.
See Pau, 73 T.C.M. at 1819, 1826. This is a marriage
penalty, but Congress presumably allows the marriage
penalty because the couple also receives offsetting benefits
available only to married couples filing a joint return.

     Of course, a married couple filing separate returns does
not receive the benefits of filing a joint return. Is it unfair,
then, that they are treated as a single taxpayer while the
unmarried couple is not? Perhaps not, for the married couple,
unlike the unmarried couple, can usually elect to file a joint
return. And perhaps Congress did not want separately filing
married couples to have a significant advantage over jointly
filing married couples.

    We have already explained that the apparent purpose of
the married-person parentheticals is to ensure that married
couples are treated as a single taxpayer for purposes of the
home mortgage interest deduction regardless of whether they
30                       VOSS V. CIR

file separately or jointly. And the same purpose is evident in
other provisions as well. For example, the statute provides
that married couples filing separate returns generally “shall
be treated as 1 taxpayer” for purposes of the definition of
qualified residence. 26 U.S.C. § 163(h)(4)(A)(ii)(I). Like the
debt limit provisions, this provision does not explicitly say
whether the same is true of married couples filing a joint
return, but we can reasonably infer that Congress also
intended to treat jointly filing couples as a single taxpayer.
See IRS Field Service Advisory No. 200137033 (Sept. 14,
2001) (opining, non-precedentially, that “[a]lthough
§ 163(h)(4)(A) does not specifically state that a married
couple filing jointly is treated as one taxpayer for purposes of
determining their mortgage interest deductions, we assume
that Congress did not intend to treat married couples filing
jointly differently than married couples filing separately”).

    We thus agree that the debt limit provisions of § 163(h)(3)
result in a marriage penalty; but we are not particularly
troubled. Congress may very well have good reasons for
allowing that result, and, in any event, Congress clearly
singled out married couples for specific treatment when it
explicitly provided lower debt limits for married couples yet,
for whatever reason, did not similarly provide lower debt
limits for unmarried co-owners.

                               V

    The dissent urges us to defer to the IRS’s interpretation of
the statute in a 2009 Chief Counsel Advice memorandum.
Dissent at 43. The memorandum, like the Tax Court below,
adopts a per-residence interpretation of § 163(h)(3)’s debt
limit provisions. Its statutory analysis consists of one
paragraph, which reads:
                        VOSS V. CIR                         31

       Under § 163(h)(3)(B)(i), acquisition
       indebtedness is defined, in relevant part, as
       indebtedness incurred in acquiring a qualified
       residence of the taxpayer—not as
       indebtedness incurred in acquiring [a]
       taxpayer’s portion of a qualified residence.
       The entire amount of indebtedness incurred
       in acquiring the qualified residence
       constitutes “acquisition indebtedness” under
       § 163(h)(3)(A)(i). . . . [U]nder
       § 163(h)(3)(B)(ii), the amount treated as
       acquisition indebtedness for purposes of the
       qualified residence interest deduction is
       limited to $1,000,000 of total, “aggregate”
       acquisition indebtedness. This is evident from
       the parenthetical in § 163(h)(3)(B)(ii) which
       limits the aggregate treated as acquisition
       indebtedness to $500,000 for a married
       taxpayer filing a separate return.

IRS Chief Counsel Advice No. 200911007, at 4 (Mar. 13,
2009).

    As the dissent acknowledges, the IRS’s Chief Counsel
Advice is only entitled to the “measure of deference
proportional to 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.’” Christopher v. SmithKline Beecham
Corp., 132 S. Ct. 2156, 2168–69 (2012) (quoting United
States v. Mead Corp., 533 U.S. 218, 228 (2001)); see also
Christensen v. Harris Cnty., 529 U.S. 576, 587 (2000)
(“Interpretations such as those . . . in policy statements,
agency manuals, and enforcement guidelines, all of which
32                       VOSS V. CIR

lack the force of law—do not warrant Chevron-style
deference.”).

     A review of these factors suggests the 2009 Chief
Counsel Advice should be given limited weight. To start, the
2009 Chief Counsel Advice is hardly thorough or
exhaustive—its analysis interpreting how the statute should
apply to unmarried co-owners consists of just one paragraph.
It treats the question as one governed by the “plain language
of the statute,” IRS Chief Counsel Advice No. 200911007, at
4, yet as our exchange, the briefs of the parties, the Tax
Court’s decision, and the statute itself demonstrate, it is
anything but “plain.” The Chief Counsel Advice does not
grapple with the statute’s taxpayer-specific definition of
“qualified residence” or repeated references to a taxpayer’s
taxable year, nor does it explain how the married-person
parenthetical is anything but surplusage under a per-residence
reading of the statute.

    As for consistency, the situation here is a far cry from that
in Hall v. United States, 132 S. Ct. 1882, 1890 (2012), a case
the dissent cites. See Dissent at 38 n.2. In Hall, the Supreme
Court “s[aw] no reason to depart from those established
understandings” of bankruptcy courts, bankruptcy
commentators, and the IRS’s consistent position for over a
decade in an IRS Chief Counsel Advice memorandum, the
Internal Revenue manual, and an IRS Litigation Guideline
Memorandum. See Hall, 132 S. Ct. at 1889–90. Here, by
contrast, there is no comparable consensus. Aside from the
IRS’s litigation position in this case, it appears that the 2009
Chief Counsel Advice—which is just six years old—is the
IRS’s only pronouncement addressing how § 163(h)(3)’s debt
                             VOSS V. CIR                               33

limits apply to unmarried co-owners.12 The agency’s
guidance is closer to a “mere[] . . . litigating position” than to
an “agency interpretation of ‘longstanding’ duration.”
Dissent at 43 (quoting Alaska Dep’t of Envtl. Conservation v.
EPA, 540 U.S. 461, 487–88 (2004)).

    Even putting all that aside, we are not persuaded by the
reasoning in the IRS’s 2009 guidance. The 2009 Chief
Counsel Advice reasons that “acquisition indebtedness” is
defined in the statute “as indebtedness incurred in acquiring
a qualified residence of the taxpayer—not as indebtedness
incurred in acquiring [a] taxpayer’s portion of a qualified
residence,” and concludes that unmarried co-owners are
“limited to $1,000,000 of total, ‘aggregate’ acquisition
indebtedness.” IRS Chief Counsel Advice No. 200911007,
at 4. But this begs the question. As we have explained,
although the statute limits “[t]he aggregate amount treated”
as acquisition or home equity debt, it does not say to whom
or what the limits apply.

    Indeed, we are not convinced the dissent is fully
persuaded by the 2009 Chief Counsel Advice either.
Although the dissent extols the IRS’s “reasonable and
persuasive” “position,” Dissent at 43, the dissent only briefly
discusses the Chief Counsel’s actual reasoning. And as for
the IRS’s arguments on appeal, the dissent shies away from
the IRS’s principal argument—i.e., that “the focus of the

  12
    Pointing to 26 C.F.R. § 1.163-10T(e), the dissent says “the IRS has
applied its expert interpretation of § 163(h) consistently for many years.”
Dissent at 44. Yet the dissent does not dispute that § 1.163-10T(e) is
completely silent as to unmarried co-owners (or any co-owners, for that
matter). The 2009 Chief Counsel Advice is the one and only IRS
pronouncement on the issue before us.
34                      VOSS V. CIR

statute is on the residence, not on the taxpayer.” We have
explained (in Part III.B) why this argument fails, yet the
dissent offers no response.

    What is more, in one important respect, the dissent rejects
the IRS’s interpretation. According to the dissent, the
married-person parenthetical is not superfluous because it
imposes a “statutory penalty” on married individuals who
decide to file separately. Id. at 48. Under this view, two
unmarried co-owners are entitled to a total debt limit of $1.1
million, a married couple filing jointly is entitled to a total
debt limit of $1.1 million, and even a single individual is
entitled to a total debt limit of $1.1 million—but a married
couple filing separately is entitled to a total debt limit of
$550,000. See id. at 46–47.

     To our knowledge, however, neither the IRS nor the Tax
Court has ever adopted the dissent’s interpretation. As the
IRS explained in its brief on appeal, “The parenthetical
language in the acquisition indebtedness limitation in
§ 163(h)(3)(B)(ii) provides that married taxpayers who file
separate returns are limited to acquisition indebtedness of
$500,000 each.” (Emphasis added.) Accord Sophy, 138 T.C.
at 212 (“[M]arried taxpayers who file separate returns are
limited to acquisition indebtedness of $500,000 each . . . .”
(emphasis added)); Bronstein, 138 T.C. 386 (“[T]he
parenthetical indebtedness limitations . . . are $550,000 for
each spouse filing a separate return.” (emphasis added)); IRS
Chief Counsel Advice No. 200911007, at 4 (explaining that
the per-residence operation of the $1 million limit on
acquisition indebtedness “is evident from the [married-
person] parenthetical,” thus implying that each separately
filing spouse gets a separate $500,000 aggregate debt limit).
                         VOSS V. CIR                         35

On this issue there is a consensus, and the dissent is on the
wrong side.

     At bottom, although an IRS Chief Counsel Advice
statement “is helpful in determining the position of the IRS,”
it is an internal IRS memorandum prepared by an individual
IRS attorney. Wells Fargo & Co. v. United States, 119 Fed.
Cl. 27, 38 (2014). The document itself cautions that it “may
not be used or cited as precedent.” IRS Chief Counsel
Advice No. 200911007, at 1. Indeed, the IRS could issue a
memorandum taking the opposite position tomorrow,
“apparently without revoking the earlier guidance.” Wells
Fargo, 119 Fed. Cl. at 38 n.12.

    Every factor the dissent says we should consider suggests
that the IRS’s interpretation should not be given significant
weight. Having considered the IRS’s reasoning as set out in
the 2009 Chief Counsel Advice and the IRS’s briefs on
appeal, we decline to adopt its interpretation.

                              VI

    We hold that 26 U.S.C. § 163(h)(3)’s debt limit
provisions apply on a per-taxpayer basis to unmarried co-
owners of a qualified residence. We infer this conclusion
from the text of the statute: By expressly providing that
married individuals filing separate returns are entitled to
deduct interest on up to $550,000 of home debt each,
Congress implied that unmarried co-owners filing separate
returns are entitled to deduct interest on up to $1.1 million of
home debt each. We accordingly reverse the Tax Court’s
decision and remand for the limited purpose of allowing the
parties to determine, in a manner consistent with this opinion,
the proper amount of qualified residence interest that
36                       VOSS V. CIR

petitioners are entitled to deduct, as well as the proper amount
of any remaining deficiency.

     REVERSED and REMANDED.

IKUTA, Circuit Judge, dissenting:

    Today the majority interprets the Tax Code to allow
unmarried taxpayers who buy an expensive residence
together to deduct twice the amount of interest paid on the
debt secured by their residence than spouses would be
allowed to deduct. While the language of the relevant statute
is ambiguous, the IRS has offered an interpretation that limits
unmarried taxpayers in this situation to deducting the same
amount as married taxpayers filing jointly. Because we
should defer to this reasonable interpretation by the IRS, I
dissent.

                               I

    The Internal Revenue Code provides that interest paid or
accrued on indebtedness shall generally be allowed as a
federal tax deduction. 26 U.S.C. § 163(a). Deductions for
personal interest paid or accrued are generally disallowed. Id.
§ 163(h)(1). Congress made an exception from this
disallowance for “qualified residence interest (within the
meaning of [§ 163(h)(3)]).” Id. § 163(h)(2). “Qualified
residence interest” is defined in § 163(h)(3) as follows:

        (3) Qualified residence interest–For purposes
        of this subsection–
                        VOSS V. CIR                         37

           (A) In general.–The term “qualified
           residence interest” means any interest
           which is paid or accrued during the
           taxable year on–

               (i) acquisition indebtedness with
               respect to any qualified residence of
               the taxpayer, or

               (ii) home equity indebtedness with
               respect to any qualified residence of
               the taxpayer.

    The statute defines “qualified residence” as “the principal
residence” of a taxpayer and one other selected home used as
a residence. Id. § 163(h)(4)(A)(i). The term “acquisition
indebtedness,” is defined as debt “incurred in acquiring,
constructing, or substantially improving any qualified
residence of the taxpayer, and [which] is secured by such
residence.” Id. § 163(h)(3)(B). But not all such debt counts
as acquisition indebtedness. Rather, “[t]he aggregate amount
treated as acquisition indebtedness for any period shall not
exceed $1,000,000 ($500,000 in the case of a married
individual filing a separate return).” Id. § 163(h)(3)(B)(ii).
Similarly, the term “home equity indebtedness” is defined as
“indebtedness (other than acquisition indebtedness) secured
by a qualified residence. . . .” Id. § 163(h)(3)(C)(i). But
again, not all the debt secured by the qualified residence
counts as home equity indebtedness. Like the case of
acquisition indebtedness, “[t]he aggregate amount treated as
home equity indebtedness for any period shall not exceed
$100,000 ($50,000 in the case of a separate return by a
married individual).” Id. § 163(h)(3)(C)(ii).
38                           VOSS V. CIR

     The IRS has adopted a straightforward application of this
statute when there is a single taxpayer or a married couple
filing jointly. If a qualified residence serves as security for
debt that is more than the specified $1.1 million, only the
interest payments on the allowed $1.1 million of the debt are
deductible. In the case of an individual taxpayer, the IRS
calculates the proportion of the taxpayer’s total interest
payments that is deductible by dividing the $1.1 million of
debt by the total amount of debt secured by the qualified
residence. See 26 C.F.R. § 1.163-10T(e);1 Chief Couns.
Advice, IRS CCA 200911007, 2009 WL 641772.2 So if the
qualified residence is security for $2.2 million in debt, the
taxpayer can calculate the proportion of interest payments
that is deductible by dividing $1.1 million (the total aggregate
debt allowed by the statute) by $2.2 million (the total amount
of debt secured by the qualified residence). The result is that

  1
   26 C.F.R. § 1.163-10T discusses “qualified residence interest” in 26
U.S.C. § 163(h)(3). § 1.163-10T(e) provides a formula to determine
qualified residence interest when secured debt exceeds the adjusted
purchase price of a house. The parties do not dispute that it is also the
applicable formula for purposes of determining what proportion of interest
payments is deductible when “the average balance of the debt” exceeds
the “applicable debt limit.” 26 C.F.R. § 1.163-10T(e). The majority
concedes that § 1.163-10T(e) applies in this context, Maj. Op. at 6, 14 n.5,
but argues that it “only addresses the situation of a single taxpayer,” Maj.
Op. at 28 n.11. Nothing in the regulation supports the majority’s
assertion, however; rather, the IRS has concluded that the regulation does
apply to co-owners. See IRS CCA 200911007, 2009 WL 641772.
  2
   Although the IRS does not deem Chief Counsel Advice letters to be
precedential, courts cite these statements when they are helpful in light of
an agency’s expertise and established practice. See, e.g., Hall v. United
States, 132 S. Ct. 1882, 1890 (2012) (holding that there was “no reason to
depart from those established understandings” contained in an IRS Chief
Counsel Advice statement, its manual, and its litigation guidelines); see
also Wells Fargo & Co. v. United States, 119 Fed Cl. 27, 37–38 (2014).
                         VOSS V. CIR                          39

the taxpayer can deduct one half of the interest the taxpayer
paid on the total debt.

    Similarly, spouses filing jointly are subject to the
$1,000,000 limit on acquisition indebtedness and the
$100,000 limit on home equity indebtedness. See Pau v.
Comm’r, 73 T.C.M. 1819, 1997 WL 28678, at *1, 12
(1997). This approach is consistent with the Tax Code’s
typical treatment of a married couple filing jointly as one
taxpayer, who together have an aggregate debt and together
are subject to the statutory limit on how much interest they
may deduct. See, e.g., 26 C.F.R. § 1.179-2(b)(5)(i) (“A
husband and wife who file a joint income tax return . . . are
treated as one taxpayer in determining the amount of the
dollar limitation under . . . this section.”); 26 C.F.R. § 1.469-
1T(j)(1) (“[S]pouses filing a joint return for a taxable year
shall be treated for such year as one taxpayer for purposes of
section 469.”).

    The IRS has also explained how this methodology applies
when there are unmarried co-owners of a qualified residence.
See Chief Couns. Advice, IRS CCA 200911007, 2009 WL
641772. Under the IRS’s interpretation, regardless of the
number of unmarried taxpayers who have an ownership
interest in a qualified residence, only interest payments on
$1.1 million of the debt encumbering that qualified residence
are deductible. Therefore, the IRS applies its formula as
follows: each co-owner who has an ownership interest in the
qualified residence may deduct a percentage of the interest
payments the co-owner paid or accrued, in proportion to the
total aggregate debt allowed by the statute ($1.1 million)
divided by the total amount of debt secured by the qualified
residence. In other words, if a taxpayer has an ownership
interest in a qualified residence that is security for $2.2
40                        VOSS V. CIR

million of debt, the taxpayer can deduct one half of the
interest payments that the taxpayer made on that debt ($1.1
million debt allowed by statute divided by $2.2 million debt
secured by the qualified residence). The other co-owners can
do the same.

                                 II

    Bruce Voss and Charles Sophy argue that we should
reject the IRS’s interpretation of 26 U.S.C. § 163(h) and
allow them double the deductible interest that an individual
taxpayer or married couple filing jointly would get. Voss and
Sophy are an unmarried couple who both claim the same
qualified residence, which is comprised of two houses. In
order to purchase their primary home in Beverly Hills,
California, they took out a $2,240,000 loan. They also
borrowed another $300,000 home equity line of credit
secured by the Beverly Hills home. In order to purchase their
second home in Rancho Mirage, California, they took out a
$486,300 loan. Voss and Sophy purchased these houses as
joint tenants, meaning that each had an undivided one-half
interest in the house. They also agreed to be jointly and
severally liable on all loans.

    Voss and Sophy filed separate tax returns for tax years
2006 and 2007. The average balance on the two mortgages
and home equity line of credit was approximately $2.7
million in tax years 2006 and 2007. Nevertheless, both Voss
and Sophy claimed deductions for the full amount of interest
each had paid on the loans on their qualified residence.3

  3
     The deductions Voss and Sophy claimed on their tax returns were
much greater than the amount they now claim under their current
interpretation of § 163(h).
                         VOSS V. CIR                         41

    The IRS issued notices of deficiency because Voss and
Sophy had claimed deductions that exceeded the limits
allowed by the Internal Revenue Code. According to the IRS,
Voss and Sophy could claim deductions for interest they had
paid on the first $1.1 million of the $2.7 million debt,
pursuant to 26 U.S.C. § 163(h)(3), and were not entitled to
claim deductions for interest paid on the entire $2.7 million
of the debt. The tax court agreed.

    On appeal, Voss and Sophy argue for a different
interpretation of § 163(h) and therefore a different application
of the IRS formula. Voss and Sophy claim that the $1.1
million “aggregate amount” of debt that can be treated as
acquisition and home equity indebtedness for purposes of
§ 163(h)(3)(B) does not relate to the total amount of debt
encumbering a qualified residence. Instead, if the total
amount of debt encumbering a qualified residence exceeds
$1.1 million, the co-owners may effectively divide that total
amount of debt between themselves and each deduct interest
payments on up to $1.1 million of their portion of the total
debt. For example, if a $2.2 million debt is secured by a
qualified residence owned by two co-owners, Voss and Sophy
claim that the co-owners can divide the debt equally between
themselves. Under this theory, Co-Owner 1 could deduct
interest payments made on $1.1 million of debt (i.e., 100
percent of Co-Owner 1’s interest payments), and of course,
Co-Owner 2 could do the same thing. As a result, the co-
owners could deduct interest payments on $2.2 million of
debt secured by their qualified residence, even though a
married couple filing jointly or a single taxpayer could deduct
interest on only $1.1 million of debt.

    Applying their interpretation, Voss argues that, because
he and Sophy each have an “equal share of the mortgage,” he
42                       VOSS V. CIR

and Sophy have divided the $2.7 million debt between
themselves on a fifty-fifty basis. Therefore, Voss can deduct
interest payments made on $1.1 million of his $1.35 million
portion of the debt secured by his qualified residence.
Dividing $1.1 million (the total aggregate debt allowed by the
statute) by $1.35 million (Voss’s self-apportioned amount of
debt secured by the qualified residence), this means about 80
percent of his interest payments is deductible. And, the
argument goes, Sophy can do the same thing. As a result,
Voss and Sophy claim they can deduct 80 percent of the
interest paid on $2.7 million, the total indebtedness on their
qualified residence, rather than deducting 40 percent of the
interest paid on that debt had they been a married couple.

                              III

    Voss and Sophy’s approach to § 163(h) should be rejected
because it is contrary to the IRS’s reasonable and persuasive
interpretation of the statute. Voss and Sophy cannot claim
that the plain language of § 163(h) compels their
interpretation; rather, the statute gives no indication that
multiple co-owners may each “treat” $1.1 million of debt as
“acquisition indebtedness” or “home equity indebtedness” for
purposes of an interest deduction. In these circumstances, we
can afford respect to an agency’s interpretation of a statute,
whether it is offered in an opinion letter, policy statement,
agency manual, or even a well-reasoned legal brief. See
Christensen v. Harris Cnty., 529 U.S. 576, 587 (2000) (citing
Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944)); see also
Christopher v. SmithKline Beecham Corp., 132 S. Ct. 2156,
2165–66, 2169 (2012). An agency interpretation of a statute
is entitled to a “measure of deference proportional to the
‘“thoroughness evident in its consideration, the validity of its
reasoning, its consistency with earlier and later
                         VOSS V. CIR                         43

pronouncements, and all those factors which give it power to
persuade.’”” Christopher, 132 S. Ct. at 2168–69 (quoting
United States v. Mead Corp., 533 U.S. 218, 228 (2001)
(quoting Skidmore, 323 U.S. at 140)). We also consider the
specialized and technical expertise of the agency, see
Skidmore, 323 U.S. at 140 (noting that the “rulings,
interpretations and opinions” of an agency “constitute a body
of experience and informed judgment to which courts and
litigants may properly resort for guidance”), as well as
whether the agency’s guidance is longstanding or merely a
litigating position. See Alaska Dept. of Envtl. Conservation
v. EPA, 540 U.S. 461, 487–88 (2004) (“We ‘normally accord
particular deference to an agency interpretation of
“longstanding” duration . . . .’” (quoting Barnhart v. Walton,
535 U.S. 212, 220 (2002))).

    Here, the IRS’s position, expressed in its legal brief on
appeal and in its 2009 Chief Counsel Advice statement, is
both reasonable and persuasive. First, it is consistent with the
text of the statute: the language of § 163(h)(3) is reasonably
read to establish that the debt limit of $1.1 million per
qualified residence applies regardless whether there is one
owner or two co-owners. The fact that “acquisition
indebtedness” is defined as debt secured by a qualified
residence suggests that Congress also contemplated that the
“aggregate amount treated as acquisition indebtedness” was
also defined with respect to a qualified residence. 26 U.S.C.
§ 163(h)(3)(B).

    And the IRS’s interpretation is more persuasive than Voss
and Sophy’s interpretation, which would result in a windfall
to unmarried taxpayers. See Tablada v. Thomas, 533 F.3d
800, 807 (9th Cir. 2008) (holding that the Bureau of Prisons’s
method for calculating good time credits was a reasonable
44                            VOSS V. CIR

interpretation of the statute, in part because the plaintiff’s
contrary method would result in a “windfall” to prisoners that
Congress did not intend). There is no basis to infer that
Congress intended to allow unmarried co-owners of a
qualified residence filing separately to deduct interest on up
to $2.2 million of debt, while limiting married co-owners of
a qualified residence to deduct interest on only half that (only
up to $1.1 million of debt). A more logical inference is that
the deduction was aimed at promoting home ownership for
ordinary folks, not to help wealthy individuals purchase
mansions that are encumbered with more than $1.1 million of
debt.

    Third, the IRS has applied its expert interpretation of
§ 163(h) consistently for many years. See id. at 807–08
(noting that the Bureau of Prisons had calculated good time
credits by a consistent methodology for at least sixteen
years). The IRS first set forth a methodology for determining
what proportion of a taxpayer’s interest payments is
deductible in 1987, when it promulgated regulation § 1.163-
10T(e). It explained how this method applied to co-owners
of a qualified residence in its Chief Counsel Advice statement
in 2009. IRS CCA 200911007, 2009 WL 641772. There is
no dispute that the IRS’s approach for calculating the
deductibility of interest payments under § 163(h)(3)(B) is not
merely “an agency’s convenient litigating position.” Bowen
v. Georgetown Univ. Hosp., 488 U.S. 204, 213 (1988). Under
these circumstances, it is appropriate to defer to the IRS’s
specialized expertise and understanding of what best
effectuates the purpose of the statute.4

 4
   The majority claims that it is inconsistent to defer to the IRS’s position
regarding the deduction for unmarried co-owners while failing to defer to
the IRS regarding the deduction for married individuals filing separately.
                             VOSS V. CIR                               45

     In response to the IRS’s reasonable interpretation of
§ 163(h)(3)(B), Voss and Sophy look for help in a separate
section of the Tax Code governing apportioning gain based
on the sale of a residence, 26 U.S.C. § 121, and its
accompanying regulation, 26 C.F.R. § 1.121-2. Section 121
allows a taxpayer who sells a residence to exclude up to
$250,000 of gain from gross income. 26 U.S.C. § 121(b)(1).
The regulations clarify that “[i]f taxpayers jointly own a
principal residence but file separate returns, each taxpayer
may exclude from gross income up to $250,000 of gain that
is attributable to each taxpayer’s interest in the property. . . .”
26 C.F.R. § 1.121-2(a)(2). Voss and Sophy argue that
because § 163(h) cross-references 26 U.S.C. § 121 for the
definition of a “qualified residence,” the methodology set
forth in § 1.121-2(a)(2) should also apply to § 163(h).
Accordingly, they argue, because they jointly own a qualified
residence, and file separate returns, they should likewise be
able to deduct the amount of interest each paid on $1.1
million of debt out of each co-owner’s “equal share of the
mortgage.” But section 121 provides Voss and Sophy no
support because it has nothing to do with § 163(h)(3). Other
than the use of § 121 for the definition of “qualified
residence,” there is no indication that either Congress or the
IRS contemplated that the methodology in § 1.121-2(a)
should be used to determine the method of determining which
interest is deductible under 26 U.S.C. § 163(h)(3). Voss and
Sophy’s argument merely shows the IRS knew how to

Maj. Op. at 34–35. But, as discussed below, the IRS has not expressed a
position as to what deduction married individuals filing separately may
claim. See infra note 5. As such, there is no interpretation to which we
could defer regarding what the statute means for married individuals filing
separately. By contrast, the IRS has offered a clear interpretation of the
statute as it applies to unmarried co-owners. We should defer to that
interpretation.
46                        VOSS V. CIR

authorize such a methodology when it chose to do so, which
it did not when interpreting § 163(h).

    In the absence of an IRS regulation interpreting § 163(h)
as allowing co-owners to claim deductions attributable to
more than $1.1 million of debt for a co-owned qualified
residence, we should defer to the IRS’s interpretation of the
statute as limiting co-owners to deducting interest on $1.1
million of debt out of the total acquisition and home equity
debt secured by the qualified residence. See Christensen, 529
U.S. at 587.

                               IV

    The majority agrees that the statute is silent as to how to
apply the debt limit of $1.1 million when there are co-owners
of a qualified residence. Maj. Op. at 7, 14. The majority
therefore exerts “considerable effort,” id. at 14, to find textual
support for using the approach demanded by Voss and Sophy.
The majority bases its ruling on the thinnest of reeds: the
parenthetical in § 163(h)(3) that specifies that a married
individual filing separately can deduct interest payments on
half the amount of debt compared to a single individual or a
married couple filing jointly. According to the majority, in
order to avoid absurdity, we should read the marriage
parenthetical as allowing married individuals filing separately
each to deduct interest on $550,000 of debt. Maj. Op. at
16–17. If married individuals filing separately were not each
able to deduct interest on $550,000 of debt through some
unspecified calculation methodology, the majority asserts,
spouses filing separately would receive half the deduction of
spouses filing jointly. This is absurd, the majority claims,
because a different debt limit for a jointly filing couple and a
separately filing couple is “surely not what the statute
                              VOSS V. CIR                                 47

intended.” Maj. Op. at 17. The majority then leaps from this
inferred congressional intent to a different conclusion:
Congress must also have intended to allow all unmarried
individuals who co-own a qualified residence secured by debt
to deduct interest on the full debt limit, $1.1 million.

    This argument too fails. First, effectuating the majority’s
approach to the marriage parenthetical would presumably
entail allowing a married taxpayer filing separately to deduct
his or her own interest payments on the debt in the proportion
of $550,000 divided by one half of the total debt secured by
the qualified residence. See Maj. Op. at 28 n.11 (agreeing
that the IRS’s formula set out in § 1.163-10T(e) “may need to
be adjusted to account for the situation of separately filing co-
owners, whether married or unmarried”). If each married
taxpayer took this approach, married taxpayers filing
separately would deduct the same amount of interest as
married taxpayers filing jointly. But this approach fails for
the same reason Voss and Sophy’s apportionment theory
fails: it flies free of the statutory language that limits the
amount “treated” as acquisition or home equity indebtedness
to a capped amount out of the total acquisition or home
equity indebtedness secured by the residence (rather than one
co-owner’s half of that total debt).5 We should instead defer

  5
    The majority asserts that there is a clear consensus among tax courts
and the IRS that a married couple filing separately may, in the aggregate,
deduct interest on up to $1.1 million of qualifying debt. See Maj. Op. at
17–18 n.8, 34–35. This is incorrect. While the sources cited by the
majority correctly indicate that the debt limit in the statute is $550,000 for
“each” married individual filing a separate return, none of these sources
explains how the IRS would apply its formula to calculate the interest
deduction for a married individual filing separately. Because the meaning
of the marriage parenthetical is unclear, it does not undercut the IRS’s
48                        VOSS V. CIR

to the IRS’s reasonable interpretation that the statute defines
“acquisition indebtedness” as “indebtedness incurred in
acquiring a qualified residence of the taxpayer - not as
indebtedness incurred in acquiring taxpayer’s portion of a
qualified residence.” IRS CCA 200911007, 2009 WL
641772.

    More importantly, the majority’s argumentum ad
absurdum fails because imposing a penalty on married
individuals for filing separately would not be not absurd. We
know that Congress could reasonably decide to discourage a
married couple from filing separate returns to minimize taxes,
because it has imposed such penalties in other portions of the
Tax Code. For example, the Tax Code prohibits married
individuals filing separately from claiming certain tax credits
or deducting interest on other types of loans. See, e.g., 26
U.S.C. § 32(d) (married individual filing separately is not
eligible for an earned income credit); id. § 221(e) (married
individual filing separately is not eligible for deducting
interest on student loans). Indeed, a tax court has already
held that the plain language of § 163(h) may result in a
penalty on a married couple filing separately compared to a
married couple filing jointly. See Bronstein v. Comm’r, 138
T.C. 382, 383–84 (2012) (rejecting a taxpayer’s argument
that Congress intended for married couples filing separately
to receive the same treatment under § 163(h)(3) as married
couples filing jointly).

     Rather, the absurdity argument works against the
majority. The majority’s approach would result in spouses
filing jointly (or separately) getting half the total deduction of

unambiguous position that unmarried co-owners may not receive double
the deduction of married co-owners.
                              VOSS V. CIR                               49

unmarried individuals.6 The majority writes this off as a
marriage penalty, supported by hypothetical policy reasons
why Congress may have intended such a result. Maj. Op. at
28–30. But the majority’s view that Congress intended to
penalize married co-owners by giving them half the deduction
allowed to unmarried co-owners seems more absurd than the
view that Congress may have intended to penalize married
couples filing separately. After all, it is more reasonable to
think that Congress wanted to encourage married couples to
file jointly to avoid a statutory penalty than it is to think that
Congress wanted to encourage taxpayers not to marry (or to
get divorced) in order to avoid forfeiting half the deduction
they could otherwise take. Given that reasonable jurists could
point to either interpretation as absurd, the better solution is
to defer to the IRS’s reasonable interpretation of the statute.

    Finally, the majority discusses the practical difficulties
that may arise if we did not allow unmarried co-owners each
to deduct interest on up to $1.1 million of debt, such as the
problem of determining how much interest each of multiple
hypothetical co-owners may deduct. Maj. Op. at 26–27.
Following the IRS’s reasonable interpretation of how the
statute works, each co-owner is entitled to deduct the interest
payments that the co-owner actually paid, multiplied by a
fraction consisting of $1.1 million divided by the total

  6
    In other words, under the majority’s theory, spouses filing jointly who
own a qualified residence encumbered with a $2.2 million loan could
deduct one half of their total interest payments (based on dividing the $1.1
million debt limit by the $2.2 million debt). But if two unmarried
taxpayers owned a qualified residence with the same $2.2 million loan, the
taxpayers could deduct 100 percent of their interest payments because
each taxpayer could treat $1.1 million as acquisition or home equity debt
(i.e., based on the $1.1 million debt limit divided by each taxpayer’s
“portion” of the debt, $1.1 million). Maj. Op. at 16–17.
50                      VOSS V. CIR

aggregate debt secured by the co-owner’s qualified residence.
So long as an individual co-owner knows the amount of
interest the co-owner personally paid, and how much debt is
secured by the qualified residence co-owned by that taxpayer,
the co-owner can calculate the amount of deductible interest.
If there are policy consequences of the plain language that
Congress did not intend, Congress can amend the statute
itself.

    The majority concedes that the statute is “anything but
‘plain’.” Maj. Op. at 32. The IRS has provided a workable
approach to Congress’s ambiguous statute that avoids many
of the problems created by the majority’s opinion. Neither
the majority nor Voss and Sophy offer arguments that would
compel departing from this approach. I would affirm the tax
court.