WASHINGTON - Rather than appeal a recent U.S. Tax Court's ruling that a bank can deduct the interest expenses of tax-exempt bonds held by a subsidiary investment company, the Internal Revenue Service is expected to try to write rules prohibiting the practice, a lawyer said yesterday.

But some members of the tax community are skeptical about whether the IRS would be able to write rules sidestepping existing tax law language and warn the agency may instead have to ask Congress to change the law.

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