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underpayment of tax for each of the years in issue. Over the 4-
year period in issue, petitioners failed to report approximately
$1 million dollars of income.
2. False Statements
Respondent argues that false statements made at the time
petitioners were interviewed by respondent’s agents are evidence
of fraudulent intent. The Supreme Court has stated that an
"affirmative willful attempt may be inferred from * * * any
conduct, the likely effect of which would be to mislead or to
conceal." Spies v. United States, supra at 499. Making false
statements to a revenue agent is evidence of fraud. See United
States v. Beacon Brass Co., 344 U.S. 43, 45 (1952).
When petitioners first met with respondent’s special agents
regarding the years in question, Mr. Bacon told them that
petitioners and their children had received extensive cash gifts
from Mr. Bacon’s grandfather in $10,000 cash increments.
According to Mr. Bacon, he received a $10,000 cash gift each year
since his 18th birthday, his wife received an annual $10,000 cash
gift since they have been married, and their children each
received an annual $10,000 cash gift since their birth. Mr.
Bacon told respondent’s agents that he received the cash gifts
through a brother-in-law, that neither petitioners nor their
children had ever met their grandfather, that they were told
never to tell anyone about the gifts, and that they were never to
put the money in the bank. Mr. Bacon told the agents that
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