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petitioner did not offer any documentary evidence supporting her
contention that this $9,555 she received from Sharer Accountancy
in 1987 was in repayment of loans. Our holding in her favor
resulted from our crediting her testimony that this money
represented loan repayments.
However, respondent's position on this issue was
substantially justified. During 1987, petitioner, who was an
accountant, helped Mr. Sharer with Sharer Accountancy's
accounting business. Substantially all of the funds that we
ultimately held to be loan repayments were paid to petitioner by
checks drawn on Sharer Accountancy's accounts that were annotated
"spousal wages". As of the time the notice of deficiency was
issued, as of the time respondent's answer was filed, and at all
other pertinent times, a reasonable basis existed for
respondent's position. See Wilfong v. United States, supra at
368-369.
C. Partnership Loss Deduction for 1986
We determined that petitioner had substantiated her
husband's adjusted basis in his partnership interest as of the
end of 1986 so as to be entitled to deduct a partnership loss for
1986. However, we think that respondent's position was
substantially justified. Petitioner provided respondent with
copies of the partnership's returns for 1980 through 1985,
helping to substantiate the adjusted basis of the partnership
interest as of the end of 1986, only shortly before trial. As of
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