Gary E. and Rebecca L. Hurley - Page 10

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          the repurchase”.  S. Rept. 99-313, at 223 (1986), 1986-3 C.B.               
          (Vol. 3) 1, 223; H. Conf. Rept. 99-841, at 168-160 (1986), 1986-3           
          C.B. (Vol. 4) 1, 168-160.  In holding that the phrase “in                   
          connection with” should be interpreted broadly, the Court also              

               When Congress adopted “in connection with” for use in                  
               section 461(g)(2), it was aware of the Supreme Court’s                 
               interpretation of the same language in Snow.[5]                        
               Therefore, it is reasonable to assume that they                        
               intended the same broad interpretation to be given to                  
               section 461(g)(2).  Thus, based on the language of the                 
               statute and past judicial interpretations of that                      
               language, we conclude that section 461(g)(2) should be                 
               broadly construed.  [Fort Howard Corp. & Subs v.                       
               Commissioner, supra at 353 n.16 (quoting Huntsman v.                   
               Commissioner, 905 F.2d 1182, 1183 (1990), revg. 91 T.C.                
               917 (1988)).]                                                          

               Petitioners commenced their home improvements 9 days after             
          their refinancing.  Mr. Hurley testified that they refinanced               
          their home mortgage in order to “free up money to be able to do             
          home improvements.  That was the whole idea of it”.  It is                  
          immaterial that the cost of the improvements exceeded                       
          petitioners’ savings from the refinancing.  The difference is not           
          grossly disproportionate.  The Court finds petitioners’ testimony           
          and the evidence presented credible and is satisfied that they              

               5The Supreme Court, in Snow v. Commissioner, 416 U.S. 500              
          (1974), held that Congress intended the phrase “in connection               
          with”, as used in sec. 174, to have a broad legislative objective           
          and provide an economic incentive; therefore, it should be                  
          interpreted broadly.                                                        

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