Sophy v. Commissioner

Charles Sophy and Bruce Voss (plaintiffs), unmarried joint tenants who were jointly and severally liable on mortgages for two residences they co-owned, each separately claimed the maximum mortgage-interest deduction based on $1 million of acquisition indebtedness per residence — together claiming a combined $2 million in acquisition indebtedness per home — even though the properties carried an average combined balance of about $2.7 million. The IRS (defendant) disallowed the portion of the deductions exceeding a single $1 million limit per residence, and Sophy and Voss appealed, arguing the statutory cap should apply separately to each unmarried co-owner rather than being shared per residence.