Alfaro, 2003-2 USTC ¶50,715 (5th Cir. November 6, 2003)

The Fifth Circuit Court of Appeals has affirmed the Tax Court’s determination that Taxpayer could not deduct interest on an income tax deficiency arising solely from income from his unincorporated law practice.

The Tax Court had upheld Temp. Treas. Reg. § 1.163-9T(b)(2)(i)(A), which provides interest paid on an individual’s income tax liabilities is non-deductible “personal” interest, regardless of the source of the income or other adjustments to which the tax liabilities relate. The Fifth Circuit confirmed Taxpayer’s obligation to pay taxes on that income and the deficiency for failing to pay the taxes in a full and timely manner was personal.