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evidence that any outside shareholder brought legal action
against petitioner for the F&M payment. There is an indication
in the record that the SEC took some action against petitioner,
but there is no evidence of why it did or the outcome of the
proceeding. Respondent has not proven, by clear and convincing
evidence, that petitioner diverted the F&M payment from
Renaissance for noncorporate purposes. In addition, respondent
has offered no proof that the jewelry items gave petitioner any
economic benefit or accession to wealth. Respondent offered no
testimony that petitioner later sold these items or even that he
or his wife ever received or possessed any of the items.
Respondent also offered no evidence that petitioner ever gave any
of these items as personal gifts on his own behalf. See Estate
of Geiger v. Commissioner, 352 F.2d 221, 231 (8th Cir 1965),
affg. T.C. Memo. 1964-153 (holding that gifts of embezzled funds
evidenced sufficient control to establish an accession to wealth
and taxable income to the embezzling donor). Although we suspect
that petitioner may have acquired control of these items and
appropriated them to his own use, our suspicion, without more, is
no substitute for clear and convincing evidence. Respondent has
failed to carry her burden of proving that the jewelry items
purchased from F&M came under petitioner's control so as to
create income to him that resulted in an underpayment of tax.
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