Professional Documents
Culture Documents
1974), T.C. Memo 1973-141. Had the taxpayer secured a mortgage before the home was
completed, purchasing the exempt bonds out of savings, it appears that the deduction could have
been preserved. The IRS has applied this doctrine outside of the Eighth Circuit, in PLR
8631006.
Because the Browns live in the Eighth Circuit, the Mariorenzi doctrine prevails, and no itemized
deduction is allowed at all, that is, for that portion of the loan that is applied to the school bonds.
Rev. Proc. 72-18 is insensitive to portfolio-diversification motives, and no personal motive
appears to exist that supports any other possible deduction. According to the logic of these
precedents, the Browns should have sold the exempt bonds and then used the proceeds to finance
their portfolio acquisitions.