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A similar result obtains with respect to the Sir Winston II.
Respondent’s analysis of the two checking accounts and one
brokerage account held by petitioner during the 1-year period
following his acquisition of the Sir Winston II concluded that
petitioner could not have expended more than $72,315 from these
sources for capital improvements to that vessel. Upon review of
respondent’s analysis, we conclude that five additional checks
that were not treated by respondent as possible capital
improvements expenditures should have been so treated. Those
checks include two checks to “Costco” totaling $1,901, two checks
to “Henry Lee Co.” totaling $2,226, and a check to “Weaver &
Weaver, P.A.” for $2,905. We conclude that the payees on these
checks do not provide a sufficient basis to exclude them as
possible expenditures for capital improvements. The total of the
foregoing additional checks is $7,032, which when added to
respondent’s calculation brings the total of possible capital
expenditures from petitioner’s checking and brokerage accounts to
22(...continued)
builder had completed it. Nonetheless, a marine survey conducted
3 days before petitioner took possession found that the vessel
was 95 percent complete, and a U.S. Coast Guard certificate of
inspection, qualified by minor deficiencies, was issued at the
same time. Moreover, petitioner settled his lawsuit against the
builder for $65,000, a figure that is inconsistent with the claim
that expenditures exceeding $500,000 were required to complete
the Sir Winston after petitioner took possession. Thus, we do
not believe that the somewhat unfinished state of the Sir Winston
when petitioner took possession can account for the remainder of
the $527,074 in claimed, but unsubstantiated, capital
improvements.
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