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that they had no cash on hand on January 1, 1975, was not
warranted.
Petitioners’ arguments miss the mark. The issue is not
whether respondent's investigation of the case was flawless
(although we have concluded that it was legally sufficient in all
respects, Estate of Spear v. Commissioner, T.C. Memo. 1996-137,
slip op. at 11-12), or whether petitioners had evidence
supporting their position. Instead, the issue is whether
respondent had a basis in fact for the position in the notice of
deficiency. As stated above, we find that respondent did.
Petitioners contend that Thomas v. Commissioner, 232 F.2d
520, 523 (1st Cir. 1956) (Commissioner may not determine that
there is no cash on hand at the beginning of a specified period
merely because the taxpayer makes no affirmative showing to the
contrary), revg. and remanding T.C. Memo. 1955-46, governs this
case. We disagree. Section 7430 was not an issue in Thomas. As
stated above, respondent had a basis in fact for determining that
the decedent and Mrs. Spear had no cash on hand at the beginning
of the net worth period.
Petitioners contend that respondent had no basis in fact
for the determination because Trepple testified that the decedent
and Mrs. Spear had a very good paper trail. We disagree. They
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