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conceded an additional $1,000 in selling expenses for lead
ballast installation, resulting in unreported gain of $155,848.
Sir Winston
On December 15, 1992, petitioner entered into a contract
with Darling Yachts, Inc., to construct a yacht to his
specifications for $623,706. The contract provided for an offset
to the contract price for any item supplied by petitioner that
Darling Yachts, Inc., was obligated to provide under the
contract. Petitioner supplied a $2,395 radar system and $18,433
in carpeting that Darling Yachts, Inc., was obligated to provide.
Petitioner also paid $49,220 for architectural fees, galley
equipment, blinds and wallpaper, miscellaneous electronics, life
jackets, and a security system for the yacht that were not
required to be provided by Darling Yachts, Inc.
Darling Yachts, Inc., did not complete the vessel by the
December 15, 1993, completion deadline specified on the contract.
When it had still not been completed approximately 12 months
later, petitioner took possession on December 6, 1994, and
undertook the completion work himself. Immediately prior to
petitioner’s taking possession, a marine survey report5 on the
5 The parties’ stipulation covering this report states that
the survey was conducted on Nov. 3, 1994. However, the report
itself is a stipulated exhibit and states that the survey was
conducted on Dec. 3, 1994. We therefore conclude that the
stipulation is erroneous and that the survey date was Dec. 3,
1994.
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