Bronstein v. Commissioner
United States Tax Court
138 T.C. 382 (2012)
Bronstein (plaintiff) and her father-in-law bought a $1.35 million property as joint tenants, subject to a mortgage; her husband held no ownership interest, though both spouses lived there and only Bronstein made the 2007 mortgage payments. Bronstein and her husband filed married-filing-separately federal returns; Bronstein alone claimed a mortgage interest deduction based on the full $1 million acquisition indebtedness limit under 26 U.S.C. § 163, and neither her husband nor father-in-law claimed any deduction. The IRS (defendant) disallowed part of the deduction, reasoning the $1 million limit must be split between spouses filing separately rather than claimed entirely by one.
Whether a married individual filing a separate income tax return is limited to a mortgage interest deduction on $500,000 of home acquisition indebtedness.