Compare the following two sentences:
Number 1 – the actual text of §163(a) – suffers from the same awkward and convoluted wording of many tax code sentences. The second sentence employs a clear, “subject, verb, predicate” structure that a reader can quickly grasp. While the second sentence is editorially preferable, we’re stuck with the first sentence.
The statute’s first four words follow a pattern similar to §162 – a dummy subject followed by a verb phrase where “shall” is substituted for “will,” to indicate future tense. The verb “allow” means, “to let someone … do something.” The complete impact of the first four words is that the government is granting taxpayers permission to do something. Ideally, the next five words would clearly tell the taxpayer what that is.
Instead, the next five words (“as a deduction all interest”) are awkward. The drafters want to say, “all interest is allowed as a deduction.” Unfortunately, the prepositional phrase which tells is in what capacity we can treat interest comes before the noun, creating an awkward phrasing that requires several readings to fully understand. “As a deduction” tells how we can treat “all interest.”
The statute allows the taxpayer to deduct two types of interest: paid and accrued. Pay means, “to give (money) in exchange for goods or services.” Its past tense is “paid.” This verb invokes the cash method of accounting, which allows a taxpayer to deduct an item, “for the taxable year in which actually made.” Accrued is the past tense of accrue; it is an accounting term of art, which the Treasury Regulations define as,
Generally, under an accrual method, income is to be included for the taxable year when all the events have occurred that fix the right to receive the income and the amount of the income can be determined with reasonable accuracy.
The payment (whether paid of accrued) must occur “within the taxable year.” "Within" is a preposition which means, “Inside the range of.” The code defines a “taxable year,” as “… the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the taxable income is computed under subtitle A.”
The preposition “on” has numerous meanings. It’s use in the phrase “on indebtedness” connotes, “used to indicates a source or basis.” There are several ways to defines indebtedness. I like the definition contained in UCC §3-104(a): “an unconditional promise or order to pay fixed amount of money, with or without interest or other charges described in the promise or order.” While this is the definition of a check, it has the same elements as a debt and is a well-written sentence.
 Concise Oxford English Dictionary, © 2004, p. 36
 Merriam-Webster Online Dictionary (https://www.merriam-webster.com/dictionary/as), last visited on February 13 (as means, “in the capacity, character, condition, or role of.”)
 The American Heritage Dictionary, Second College Edition © 1985, p. 911
 Treas. Reg. 1.446-1(c)(ii)
 Id; see also 1.446-2 Method of Accounting for Interest
 Oxford at 1657
 26 U.S.C. §7701(a)(23)
 American Heritage at 867
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