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T.C. 430, 442 (1997) (citing Huffman v. Commissioner, 978 F.2d
1139, 1147 (9th Cir. 1992), affg. in part, revg. in part and
remanding T.C. Memo. 1991-144).
On the date respondent issued the notice of deficiency and
after filing his answer, respondent maintained the position that
petitioners were not, in 1999, in the business of refurbishing or
selling real estate. As a result, respondent contends that
petitioners’ “house should have been treated as investment
property and the loss from the sale should have been treated as a
capital loss.” Indeed, in previous years, petitioners claimed,
but subsequently acquiesced to respondent’s disallowance of,
certain reported business expenses. Thus, respondent’s position
was substantially justified and reasonable based upon the
information available to him at the time he took a position in
the administrative and judicial proceedings. The fact that
petitioners established at trial that they were engaged in a
trade or business does not diminish the reasonableness of
respondent’s position. See Wasie v. Commissioner, 86 T.C. 962,
969 (1986).
The second basis for respondent’s objection to petitioners’
motion to recover litigation costs is that petitioners failed to
provide a detailed affidavit setting forth the nature and amount
of each cost. A motion for award of costs must be accompanied by
a “detailed affidavit * * * which sets forth distinctly the
nature and amount of each item of costs for which an award is
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