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circumstances that expenditures in fact occurred which lack only
direct proof as to their amounts.
Second, petitioner’s attempt to estimate his purported
expenditures for capital improvements for the yachts is not
reliable. Petitioner has proffered spreadsheets that purport to
document the expenditures he incurred to complete certain other
yachts that he arranged to have constructed in years after the
construction of the vessels at issue. As best we understand
petitioner’s argument, he contends that the expenditures he made
to complete the later-built yachts provide a basis for estimating
the capital expenditures he made with respect to the yachts at
issue.
However, petitioner’s analysis is fundamentally flawed. The
later-built yachts were constructed pursuant to “cost-plus”
contracts, whereas the yachts at issue were constructed pursuant
to fixed-price contracts. The unchallenged testimony of an
official at Marine Builders, Inc., was that under the “cost-plus”
contracts, petitioner himself provided a greater portion of the
material used in the vessel’s construction than under fixed-price
contracts. Thus, it has not been shown that the expenditures
that petitioner may have been required to incur in connection
with the completion of a yacht under a “cost-plus” contract
approximate the expenditures he would have incurred to obtain a
completed yacht under a fixed-price contract. Moreover, even if
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