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did not have adequate records of their cash transactions.
Trepple's testimony related to money the decedent and Mrs. Spear
withdrew from their corporations and is not in context here.
Petitioners contend that the source of the decedent and Mrs.
Spear's cash hoard is irrelevant to whether respondent had a
basis in fact to determine that the decedent and Mrs. Spear had
no cash on hand. Even if the decedent and Mrs. Spear's
contentions were true, it does not change our conclusion that
respondent had a basis in fact for the determination about the
amount of cash on hand.
4. Conclusion
We conclude that respondent's position in the notice of
deficiency that the decedent and Mrs. Spear had no cash on hand
at the beginning of the net worth period and that they were
liable for the addition to tax for fraud for the years in issue
had a basis in fact.
D. Whether Respondent Had a Basis in Law for the Position in
the Notice of Deficiency
1. Basis in Law
Petitioners do not dispute that the legal authorities cited
by respondent govern the issues in dispute. Both parties cite
United States v. Massei, 355 U.S. 595 (1958), Holland v. United
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