Csaba L. Magassy and Frances H. Magassy - Page 11

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               On January 27, 1995, SMSM signed a charter agreement with              
          Priscilla Yacht Management under which the Feadship became a part           
          of Priscilla Yacht Management’s charter fleet operation.  On                
          February 10, 1995, petitioner registered SMSM with the Florida              
          Department of Revenue as a sales and charter boat dealer.                   
               On March 8, 1995, petitioner transferred title to the                  
          Feadship to SMSM.  Checking and credit card accounts were                   
          established in the name of SMSM, and SMSM borrowed $874,000 to              
          refinance and to pay off the remaining balance on the $1 million            
          loan that petitioner had obtained to purchase the Feadship.                 
               None of the members of the Magassy family were qualified               
          yachtsmen.  From approximately March 16 through March 18, 1995,             
          however, Mrs. Magassy and petitioners’ three children were aboard           
          the Feadship during the Feadship’s first sea trial from                     
          Ft. Lauderdale, Florida, to Port Lucaya, Bahamas.  From March 24            
          through March 27, 1995, petitioners and their sons were aboard              
          the Feadship during a sea trial of the Feadship from                        
          Ft. Lauderdale to Hurricane Hole, Bahamas.  On at least three               
          additional occasions, different Magassy family members took                 
          personal vacations on board the Feadship while it was in the                
          Bahamas.                                                                    
               On a number of occasions during 1995, 1996, and 1997,                  
          petitioners held dinner cruises and cocktail parties on the                 
          Feadship.  Also, on occasion, without staying overnight, Magassy            






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