On June 3, 2020, the Tax Court issued a Memorandum Opinion in the case of McCarthy v. Commissioner (T.C. Memo. 2020-74). The issues before the court in McCarthy v. Commissioner were (1) whether the petitioner is entitled to deductions for qualified residence indebtedness with respect to real properties in New York and California, and (2) whether petitioner is liable for an accuracy-related penalty under IRC § 6662. Brief Background on Residences of Petitioner in McCarthy v. Commissioner From about 1999 to 2003, the petitioner resided at the Hermosa Beach property and paid rent to a friend and fellow CPA. In 2005, the petitioner moved to New York City, New York. He later bought a co-op unit there and resided in it until 2014, when his job ended unexpectedly. He then moved to Minnesota. Qualified Residence Interest – A Primer Although the general rule IRC § 163(a) provides that a taxpayer…