Any chance for abatement?

[Black Bart]

Say Snag,

Some on this board will say this is preposterous, but I have filed a schedule C with zero revenue, business interest deduction, and got a refund based on same. Return was later audited and the auditor accepted the interest deduction as a business expense.

I've done something like that a couple of times (no refund, but used loss against other income/ also was E apartment rentals instead of C). My client had gone out of business and I've wondered -- does the fact that they're no longer operating the C/E have any bearing on whether or not you could deduct this expense, even though the liability was incurred during the time they were active?

Could IRS say it's now a personal schedule A item?