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for respondent’s 1987 audit and the resulting refund, there could
not be a holding of fraud against petitioner for 1983. For all
we can tell, petitioner did not initiate that refund. We do not
decide in the instant cases whether on these facts, a taxpayer is
entitled to a ruling of “no fraud” as a matter of law, but we do
conclude that, on these facts, the evidence of fraud is less than
“clear and convincing”.
We hold for petitioner as to 1983.
(b) 1984. The circumstances of the American Express
invoices for 1984 present a special problem. For 1984, in part
I.A.(2), supra, we concluded that respondent proved by clear and
convincing evidence that Betsy received from Markette a $780
constructive dividend, which petitioner and Betsy omitted from
their 1984 joint tax return. See supra table 17. Based on the
record in the instant cases, however, it is not clear that
petitioner knew that Markette paid for the trip to Orlando.
Petitioner and Baybrook established the routine discussed supra
(Daily Operation: 1980-March 1986) for payment of the charges on
the Markette American Express invoices. From this description,
it appears that petitioner did not examine the American Express
invoices in detail until they were returned to him with an
attached check prepared by Baybrook. The record is not clear as
to what steps petitioner and Baybrook took to process an invoice,
like the October 1984 invoice on which the airlines tickets to
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