February 2015

Emily Kingston Argues Tax Case Before Ninth Circuit on limitations of qualified residence mortgage and home equity interest deductions under I.R.C. sec. 163(h)(3)(B)(ii) and (C)(ii).


On February 5, 2015, Sideman & Bancroft LLP Partner Emily Kingston appeared before the U.S. Court of Appeals for the Ninth Circuit to present oral argument in Bruce Voss, et al. v. CIR.

Speaking on behalf of Appellants, Ms. Kingston argued for overturning the U.S. Tax Court’s 2012 denial of Mr. Voss and his partner’s petitions for redetermination of federal income tax deficiencies for 2006 and 2007. The case, filed in 2009, concerns limitations with respect to qualified residence mortgage interest and related home equity deductions for two qualified residences Mr. Voss co-owned with his partner. Under I.R.C. sec. 163(h)(3)(B)(ii) and (C)(ii), the IRS determined that Mr. Voss and his partner could not deduct more than a proportionate share of interest they paid on acquisition and home equity indebtedness of up to $1.1 million for their jointly owned qualified residences, effectively cutting their mortgage interest deductions by more than half of the amounts claimed, and further erred in calculating the deducible amounts under their own ruling. However, Mr. Voss and his partner contended that the $1.1 million limitations on acquisition and home equity indebtedness should apply separately to each taxpayer. In her argument to the Ninth Circuit, Ms. Kingston argued that the Tax Court, in upholding the IRS’ determination, ignored the plain language of I.R.C. sec. 163(h)(3)(B)(ii) and (C)(ii), which does not contain any language indicating that two single taxpayers who co-own a qualified residence are limited to claiming deductions on just their proportionate share of the $1.1 million debt. As such, Ms. Kingston argued that these two single Taxpayers in this case were each entitled to deduct interest paid on acquisition and home equity indebtedness of up to $1.1 million. Whatever determination is made by the Ninth Circuit in this case will have far-reaching implications, potentially affecting millions of single taxpayers who co-own qualified residences encumbered by acquisition and home equity indebtedness.

A video of Ms. Kingston’s argument can be found here.