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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
noted:
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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