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IRS Decision May Impact Mortgage Interest Deduction in Some Cases

IRS Decision May Impact Mortgage Interest Deduction in Some Cases

The Internal Revenue Service has acquiesced in the Ninth Circuit court’s decision on a year-old tax case involving unmarried co-owners of real estate.

The case involved Charles Sophy and Bruce Voss, two unmarried co-owners of real estate who each claimed a home mortgage interest deduction. The Code section allows taxpayers to deduct interest on up to $1 million in home acquisition debt and another $100,000 in home equity debt.

The IRS disagreed, saying the two were jointly subject the section’s debt limits, and disallowed a goodly portion of the claimed deductions. Sophy and Voss claimed they were entitled to deduct their interest up to $1.1 million since the provision applies on a per-taxpayer basis. The Ninth Circuit court agreed.

All that was a year ago. Now, the IRS has announced it won’t stand in the way of that ruling. According to the IRS’ filing on the case, acquiescing means that the Internal Revenue Service accepts the holding of the court in a case and that the IRS will follow it in disposing of cases with the same controlling facts.

However, “acquiescence” indicates neither approval nor disapproval of the reasons assigned by the court for its conclusions. In other words, the IRS will abide by the court’s ruling in this case and in other cases with the same set of circumstances. But the IRS reserves the right to disagree with the court’s reasoning.

Bob Williams

Forget genes; I’ve got words in my DNA. Communication has been part of who I am nearly all my life. From a long career in radio news to another one in newspapers – and a University of Georgia journalism degree sandwiched between the two – language has been my life. I’ve also been fortunate to have learned the tax business from the ground up here at Drake, starting with 1040.com online forms some years ago before moving on to work on the Web. In all things tax-ish, we aim to give you tools you can use.

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