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$79,347. As with the Sir Winston, we make the assumption
favorable to petitioner that the entire $54,689 of his credit
card expenditures during the 1-year period following acquisition
of the Sir Winston II was expended for capital improvements to
that vessel. Thus, after the petitioner-favorable adjustments
that we make to respondent’s analysis, the maximum in
expenditures from his checking, brokerage, and credit card
accounts that could have been for capital improvements to the Sir
Winston II is $134,036, or $522,783 less than the $656,819 in
reported basis that petitioner has not substantiated. We do not
accept the premise that cash transactions can account for this
discrepancy, and consequently we conclude that respondent has
shown by clear and convincing evidence that petitioner had an
underpayment for 1997, attributable to a failure to report a
substantial amount of gain on the sale of the Sir Winston II.
Fraudulent Intent
“Fraud is established by proving that the taxpayer intended
to evade tax believed to be owing by conduct intended to conceal,
mislead, or otherwise prevent the collection of such tax.”
Recklitis v. Commissioner, 91 T.C. 874, 909 (1988). The
existence of fraud is a question of fact established by
consideration of the entire record. Petzoldt v. Commissioner, 92
T.C. at 699; Estate of Pittard v. Commissioner, 69 T.C. 391
(1977). Direct proof of fraud is seldom available; therefore,
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