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Orlando appeared, which showed a net credit and not a net amount
due. Because Baybrook would not have had to prepare a check as
payment for the October 1984 invoice, it is not clear whether
petitioner examined the October invoice in detail. If petitioner
had examined the October invoice and traced the charges and
payments made back to the August 1984 invoice, then petitioner
would have realized that the airlines tickets to Orlando
appearing on the October invoice were “paid for” with credit
issued on account of the refund of charges appearing on the
August invoice. It is not clear that petitioner went through
such deliberation. It is not clear whether petitioner actually
knew, much less intended, that Markette paid for the airlines
tickets to Orlando; thus, it is not clear that petitioner knew
and intended that that amount be omitted from petitioner’s and
Betsy’s 1984 joint tax return. Respondent has failed to prove by
clear and convincing evidence that the omission of the $780
constructive dividend in 1984 was due to petitioner’s fraud.
As shown supra table 17, this $780 item is the only one of
the items that respondent relies on as to which we have found
that respondent showed by clear and convincing evidence that
petitioner had an underpayment of tax for 1984. Respondent’s
failure to show by clear and convincing evidence that this $780
omission was fraudulent leads to the conclusion that respondent
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