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reported that they had acquired the Netherland Inn Road property
in March 1991, that they had a “Cost or other basis” in the
property of $109,000, and that they sold it in December 1993 for
$115,000. From the evidence in the record, it is unclear that
the $109,000 does not include the cost of the alleged improvement
on the property. Petitioners have not explained why, if the
property were worth $127,000 on January 1, 1993, as they allege,
it would have been sold in December 1993 for $115,000, as they
have reported. In sum, petitioners have failed to show that the
$109,000 value used by respondent should be increased.
4. Alleged Undeposited Check
Petitioners also argue that a check to petitioner for
$5,800, which was received in 1992 but not deposited until
January 1993, should have been included in petitioners’ 1993
opening net worth. In support of this contention, petitioners
rely upon an exhibit incorporating the uncashed check.
Petitioners failed, however, to offer this exhibit into evidence,
and we lack an evidentiary basis for making the finding
petitioners seek.
II. Fraud
Section 6663(a) imposes a 75-percent penalty on any part of
a tax underpayment due to fraud. The two elements of civil fraud
under section 6663 are the existence of an underpayment and
fraudulent intent. Conti v. Commissioner, 39 F.3d 658, 664-665
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