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petitioner determined how much of the cost savings he would
receive from line item savings in the construction budget for
each project. Even though petitioner determined how much of the
cost savings he was to receive, petitioner failed to report these
amounts as income on his 1983 and 1984 returns. Petitioner also
failed to inform Meeks that Newtowne was constructing his house,
and that the cost savings were being credited to his construction
account.
Petitioner's failure to report this income, coupled with the
method by which he obtained the funds, indicates petitioner's
fraudulent intent. We have found that petitioner failed to
report $106,037.66 and $230,657.69 on his 1983 and 1984 returns,
respectively. Accordingly, we hold that $106,037.66 and
$230,657.69 is attributable to fraud for section 6653(b)(2)
purposes.
(5) Uncollectible Operating Expenses
Petitioner claimed a bad debt deduction in the amount of
$2,516,224 on his 1984 return attributable to "Uncollectible
operating advances". Respondent asserts that the entire amount
of the underpayment due to petitioner's bad debt deduction is
attributable to fraud. As indicated, we have held that
petitioner was not entitled to claim the bad debt deduction in
the amount of $2,035,424 on his 1984 return. We must now
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