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1994, petitioner incurred additional costs of approximately
$450,000 relating to continuing work on the Feadship.
With petitioner’s consent, in June of 1994, Captain Coby
transported the Feadship to the Merrill Stevens Boat Yard in
Miami, Florida, where Captain Coby continued to supervise
restoration work on the Feadship for which petitioner paid at
least an additional $456,000.
On December 7, 1994, petitioner organized S.M.S.M., Inc.
(SMSM), as a Florida corporation for the stated purpose of
chartering the Feadship. SMSM made a timely S corporation
election, and at all relevant times, petitioner was the sole
shareholder and director of SMSM.
On December 14, 1994, petitioner entered into an agreement
with Richard Bertram Yachts to list the Feadship for sale. The
listing agreement stated an asking price for the Feadship of $2.4
million. This asking price was significantly less than
petitioner’s cumulative costs of approximately $3.5 million
relating to his purchase and restoration work on the Feadship.
On December 24, 1994, the Feadship was moved to another
shipyard in Florida for yet further restoration work. At this
time, Mrs. Magassy became involved, incurring additional costs of
approximately $222,000 primarily in decorating the interior of
the Feadship.
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