the meaning of the words therein is "inescapably ambiguous". Garcia v. United States, 469 U.S. 70, 76 n.3 (1984); see also Ex parte Collett, 337 U.S. 55 (1949). The relevant text of section 163(h) reads:

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.

*** the term "personal interest" means any interest *** other than*** interest paid or accrued on indebtedness properly allocable to a trade or business * * *

[Sec. 163(h)(1) and (2)(A).]

This text is not ambiguous. Interest paid on a debt that is properly allocable to a trade or business is not personal interest under section 163(h). Given the clarity of this text, the beginning and end of our inquiry should be the statutory text, and we should apply the plain and common meaning of the statute.6 TVA v. Hill, 437 U.S. 153 (1978); United States v. American Trucking Associations, Inc. 310 U.S. 534, 543– 544 (1940). As the U.S. Supreme Court has said:

canons of construction are no more than rules of thumb that help courts determine the meaning of legislation, and in interpreting a statute a court should always turn first to one, cardinal canon before all others. We have stated time and time again that courts must presume that a legislature says in a statute what it means and means in a statute what it says there. ***When the words of a statute are unambiguous, then, this first canon is also the last: judicial inquiry is complete. [Connecticut Natl. Bank v. Germain, 503 U.S. 249, 253-254 (1992); citations and quotation marks omitted.]

6 Indeed, the Commissioner has done just that with respect to the term "properly allocable". The Commissioner prescribed sec. 1.163-8T, Temporary Income Tax Regs., to determine the amount of interest that is properly allocable to a trade or business. Sec. 1.163-9T(b)(1)(i), Temporary Income Tax Regs., 52 Fed. Reg. 48409 (Dec. 22, 1987). Sec. 1.163-8T(a)(3), (4)(i)(A), (b)(7), and (c)(3)(ii), Temporary Income Tax Regs., 52 Fed. Reg. 24999-25001 (July 2, 1987), provides that interest is properly allocable to a trade or business to the extent that the proceeds of the underlying debt are traceable to an "expenditure *** in connection with the conduct of any trade or business". But for sec. 1.163-9T(b)(2)(i)(A), Temporary Income Tax Regs., 52 Fed. Reg. 48409 (Dec. 22, 1987), there should be no dispute that petitioners may deduct their deficiency interest because the interest is connected to the Federal income taxes that they must pay on their business income. Fort Howard Corp. & Subs. v. Commissioner, 103 T.C. 345, 352 (1994) (an expense is incurred "in connection with" the conduct of a trade orbusiness if it is associated with or logically related); Polk v. Commissioner, 31 T.C. 412, 415 (1958) (deficiency interest deductible as a business expense because the deficiency “arose in connection with * * * [the taxpayer's] business, and was proximately related thereto, and that the same must be said of the interest paid thereon"), affd. 276 F.2d 601 (10th Cir. 1960); see also Reise v. Commissioner, 35 T.C. 571 (1961), and the cases cited therein, affd. 299 F.2d 380 (7th Cir. 1962).

Although a plain reading of the statute is ordinarily conclusive, I recognize that a clear legislative intent that is contrary to the text may sometimes lead to a different result. Consumer Prod. Safety Commn. v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980); see also Halpern v. Commissioner, 96 T.C. 895, 899 (1991) (only "unequivocal evidence" of legislative purpose in the history to a statute may override the plain meaning of the words therein). I find no clear and unequivocal legislative intent that would support the Commissioner's taking a position in section 1.1639T(b)(2)(i)(A), Temporary Income Tax Regs., supra, that is inconsistent with the statute. The conference report to the TRA states that "Personal interest is any interest, other than interest incurred or continued in connection with the conduct of a trade or business (other than the trade or business of performing services as an employee), investment interest, or interest taken into account in computing the taxpayer's income or loss from passive activities for the year." H. Conf. Rept. 99-841, at II-154 (1986), 1986-3 C.B. (Vol. 4) 1, 154; see also S. Rept. 99-313, at 804-806, 1986–3 C.B. (Vol. 3) 1, 804-806. Although the conference report further states that "Personal interest also generally includes interest on tax deficiencies", H. Conf. Rept. 99-841, supra at II-154, 19863 C.B. (Vol. 4) at 154, I agree with the majority that this reference is to tax deficiencies that are not business related. I do not believe that the Congress meant to change sub silentio the pre-existing judicial view that interest on income tax deficiencies attributable to a trade or business is deductible. I conclude that the disallowance for personal interest in section 163(h)(2) relates only to interest not qualifying as a trade or business expense under section 62(a)(1) or 162(a).

My conclusion is not changed by the broad interpretation given to section 163(h)(2) by the Joint Committee in the 1986 Bluebook. I give little weight to this broad interpretation. Flood v. United States, 33 F.3d 1174, 1178 (9th Cir. 1994); Slaven v. BP America, Inc., 973 F.2d 1468, 1475 (9th Cir. 1992). The 1986 Bluebook is not legislative history; it was written after the enactment of the TRA. See Flood v. United States, supra at 1178; McDonald v. Commissioner, 764 F.2d 322, 336-337 n.25 (5th Cir. 1985), affg. T.C. Memo. 1983197; 1 Mertens, Law of Federal Income Taxation, sec. 3.20, at 31 (1994). It was not approved by the Congress before its

release. See Estate of Hutchinson v. Commissioner, 765 F.2d 665, 669–670 (7th Cir. 1985), affg. T.C. Memo. 1984-55. It does not comport with the text of section 163(h) or the legislative history thereunder. I recognize that both the U.S. Supreme Court and this Court have relied on the Blue Book, see, e.g., FPC v. Memphis Light, Gas & Water Div., 411 U.S. 458, 471-472 (1973); Estate of Sachs v. Commissioner, 88 T.C. 769, 775 (1987), affd. in part and revd. in part 856 F.2d 1158 (8th Cir. 1988), and that it is entitled to great respect, Estate of Hutchinson v. Commissioner, supra at 669–670; McDonald v. Commissioner, supra at 336-337 n.25. All the same, we should not be bound by statements in the 1986 Bluebook that are unsupported by and contrary to section 163 and its legislative history.

The nuts and bolts of this case is that the Commissioner continues to disagree with the pre-TRA judicial view that an individual engaged in a trade or business may deduct from gross income the amount of interest on a Federal income tax liability that is attributable to his or her business. Thus, the Commissioner prescribed her position into section 1.1639T(b)(2)(i)(A), Temporary Income Tax Regs., supra, under the guise of the TRA's amendments to section 163. Section 1.163– 9T(b)(2)(i)(A), Temporary Income Tax Regs., supra, is inconsistent with section 163(h). The nondeductibility of personal interest does not apply to interest on a Federal income tax liability that is properly allocable to a trade or business. Sec. 163(h)(2)(A). Interest on a Federal income tax liability that is properly allocable to a trade or business is deductible under section 162(a) if the incurrence of the interest is ordinary and necessary to the trade or business. If the Congress had intended to disallow any deduction for deficiency interest that was an ordinary and necessary business expense under section 162(a), the Congress would have said so. Instead, the Congress clearly stated that personal interest does not include "interest paid or accrued on indebtedness properly allocable to a trade or business (other than the trade or business of performing services as an employee)". Sec. 165(h)(2)(A). Because the Commissioner's prescription of section 1.163-9T(b)(2)(i)(A), Temporary Income Tax Regs., supra, is inconsistent with the statute (and is not within the “legislature's revealed design" for the TRA's amendments to section 163, NationsBank v. Variable Annuity Life Ins. Co.,

513 U.S. 115 S. Ct. 810, 813-814 (1995)), I concur in the majority's holding that it is outside the bounds of her regulatory authority under section 7805(a).7 Section 1.1639T(b)(2)(i)(A), Temporary Income Tax Regs., supra, is invalid. Accord Professional Equities, Inc. v. Commissioner, 89 T.C. 165 (1987); Stephenson Trust v. Commissioner, 81 T.C. 283 (1983); see RLC Indus. Co. v. Commissioner, 58 F.3d 413, 418 (9th Cir. 1995), affg. 98 T.C. 457 (1992).

SWIFT, WRIGHT, PARR, and VASQUEZ, JJ., agree with this concurring opinion.

RUWE, J., dissenting: I disagree with the majority for reasons already well stated by the Court of Appeals for the Eighth Circuit in Miller v. United States, 65 F.3d 687 (8th Cir. 1995). Since there is no need to repeat those reasons, I shall confine myself to addressing several aspects of the majority opinion not addressed in Miller.

First, I do not believe that the conference committee's use of the word "generally" supports the majority's reasoning. The conference committee report states: "Personal interest also generally includes interest on tax deficiencies". H. Conf. Rept. 99-841, at II-154 (1986), 1986-3 C.B. (Vol. 4) 1, 154. The majority seizes upon the word "generally" and reasons that Congress could not have intended to declare that all interest on "income" tax deficiencies is personal interest. However, in the conference committee report, the word “generally" modifies "tax deficiencies", not "income tax deficiencies". The term "tax deficiencies", which also includes estate and gift tax deficiencies, is obviously broader than the term "income tax deficiencies". Congress statutorily excluded some interest on tax deficiencies from the "personal interest" definition by specifically providing in section 163(h)(2)(E) that interest on estate taxes imposed by section 2001 is, in

7I note that the Commissioner's position in the instant case is inconsistent with a recent administrative position of hers. In Rev. Rul. 92-29, 1992-1 C.B. 20, the Commissioner modified Rev. Rul. 70-40, 1970-1 C.B. 50, to state that sec. 62(a)(1) allows an individual to deduct litigation expenses incurred in determining State and Federal income taxes on income derived from his or her trade or business. The recent ruling also states that an individual may deduct the portion of a tax preparation fee that is attributable to his or her sole-proprietor business. Given the Commissioner's position with respect to these litigation expenses and tax preparation fees, I am unable to fathom why she continues to believe that the interest on a tax deficiency that is allocable to a trade or business is not also deductible.

certain circumstances, not personal interest. Therefore, the use of the word "generally" in the conference committee report was both technically correct and consistent with the regulation's holding that all interest on individual income tax deficiencies is personal interest. Indeed, use of the word "generally" indicates that allowing interest on a "tax deficiency" would be an exception to the norm, such as provided for by section 163(h)(2)(E), and would not include the very common situation where an "income tax deficiency" is based on adjustments to items reported on an individual's Schedule C.

Second, the body of case law relied upon by the majority found its genesis to a large extent in the failure of section 22(n) of the Internal Revenue Code of 1939 to directly address whether an individual was entitled to deduct interest on an income tax deficiency attributable to a trade or business and the lack of legislative history and regulations on the subject. See Commissioner v. Standing, 259 F.2d 450 (4th Cir. 1958), affg. 28 T.C. 789 (1957). However, in Tanner v. Commissioner, 45 T.C. 145, 150 (1965), affd. 363 F.2d 36 (4th Cir. 1966), where we held that an individual taxpayer was not allowed to deduct State individual income taxes as a business expense, we observed:

In reaching its conclusion [in Standing], the court pointed out that neither the committee reports nor the regulations with respect to section 22(n)(1) specifically mentioned interest on tax deficiencies with respect to business income or legal expenses incurred in contesting such deficiencies. The same cannot be said, of course, with respect to State income taxes. As pointed out hereinabove, both the committee reports and the regulations specifically state that State income taxes, even though incurred as a result of business profits, are not deductible in computing adjusted gross income. Like the situation presented to us in Tanner, both the legislative history and contemporaneous regulations support a holding that the interest paid on petitioners' late income tax payment constitutes nondeductible "personal interest".

Third, the majority expresses concern that the regulation in issue "discriminates against the individual who operates his or her business as a proprietorship instead of in corporate form where the limitations on the deduction of 'personal interest' would not apply." See majority op. pp. 40-41. The short answer to this is that Congress, when it enacted section 163(h) disallowing personal interest, excluded corporate