Estate of Leon Spear, Deceased, Jeannette Spear, Harvey Spear, and Robin Spear, Administrators, and Jeannette Spear - Page 10

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          As a result, respondent obtained information which provided a               
          basis in fact for respondent's position in the notice of                    
               2.   Respondent's Basis in Fact for the Determination                  
               Petitioners contend that respondent had no basis in fact for           
          the position that the decedent and Mrs. Spear had no cash on hand           
          on January 1, 1975, and that petitioners were liable for the                
          addition to tax for fraud.  We disagree.                                    
               Respondent's basis in fact for determining that the decedent           
          and Mrs. Spear had no cash on hand on January 1, 1975, was:  (a)            
          Mrs. Spear told respondent's agents that they did not have cash             
          at home, at their business, or on their persons; (b) petitioners            
          borrowed money to buy real estate; and (c) petitioners signed a             
          financial statement attached to a mortgage application in which             
          they stated that they had $2,800 in cash, which they used as a              
          downpayment on the property and listed no other assets or cash              
          balances.  Respondent's basis in fact for concluding that Abe               
          Spear did not give petitioners a cash gift was information                  
          indicating that he did not have the means to do so.  For example,           
          before issuing the notice of deficiency, respondent learned that            
          Abe Spear pawned family jewelry and borrowed money, including               
          $1,000 from his daughter Sadie.                                             

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