- 16 -
and thus, the Court of Appeals' instruction concerning the
treatment of the deemed facts does not affect our analysis to
that extent.
In our prior opinion, several badges of fraud were present.
Estate of Spear v. Commissioner, T.C. Memo. 1993-213 (slip. op.
at 58-61). We now conclude that the badges of fraud without the
deemed facts enumerated in supra note 2, do not clearly and
convincingly establish petitioners' fraudulent intent.
2(...continued)
(m) The three corporations, Ezy Parks, Inc.,
Tumble Down, Inc. and Ezy Parks II, Inc. which were
owned and operated by petitioners generated substantial
cash receipts for each of the years 1975, 1976 and
1977.
(n) The respondent has determined the petitioners
[sic] correct taxable income for the taxable years
1975, 1976 and 1977 on the basis of petitioners [sic]
net worth increases and non-deductible expenditures
during each of the years 1975, 1976 and 1977.
* * * * * * *
(q) On April 7, 1976, petitioners incorporated an
entity known as Jay Faunce, Inc.
* * * * * * *
(x) Petitioners made investments and expenditures
far in excess of the amounts of income they reported on
their tax returns for the taxable years 1975, 1976 and
1977.
(z) Petitioners reported on their respective
income tax returns adjusted gross income of only
$35,902.00 for 1975, $45,893.00 for 1976, and
$206,568.44 for 1977.
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