- 26 - Sokol v. Commissioner, 92 T.C. 760, 765-766 n.10 (1989); Sher v. Commissioner, 89 T.C. 79, 87 (1989); DeVenney v. Commissioner, 85 T.C. 927 (1985); see also Johnson v. Commissioner, T.C. Memo. 1991-447; Spirtis v. Commissioner, T.C. Memo. 1985-44. The fact that respondent's counsel ultimately decided to concede the case may reflect a consideration of a variety of factors--including litigation risks--which earlier were not considered or which were not weighed as heavily by respondent. Furthermore, the record shows that the parties were actively engaged in negotiations throughout the litigation process, and that respondent did not unreasonably delay acting upon any information which he received from petitioners. Accordingly, we find respondent's position denying Schedule E loss deductions for the tax years 1992 through 1994 reasonable and substantially justified. Deductions for Losses Arising From Diplomat Associates The parties disagreed as to whether petitioners were entitled to claim a deduction for section 1231 loss resulting from an unsuccessful operation of Diplomat Associates, an accrual-method partnership that Phillip and his associates formed in 1986 in order to engage in an apartment rental business. Diplomat Associates purchased an apartment building for approximately $1.4 million, the cost of which was financed in large part by a mortgage made to the partnership.Page: Previous 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Next
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