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Upon his receipt of the financial statements from petitioner, Cox
did not have clear evidence of tax fraud such that the only
reasonable conclusion was that petitioner willfully set out to
evade his Federal tax liability. Given that Cox knew at the time
of the entry that the house and vehicles were actually titled in
the public records in names other than petitioner’s, the question
was whether one or more of those assets was actually owned by
petitioner and thus inappropriately omitted from his financial
statements. Cox needed to, and actually did, perform further
investigation of each asset to make that determination. It was
only after he completed that and other further investigation that
he verified and firmly believed that petitioner’s financial
statements were fraudulent and deserving of a referral of
petitioner to CID. By analogy to an observation of the Court of
Appeals for the Sixth Circuit in United States v. McKee, supra at
543, when faced with a similar setting, only the most overzealous
revenue officer would have considered referring petitioner’s case
to CID upon receiving petitioner’s financial statements which on
their face did not appear to be trustworthy but which in fact
reflected the ownership of the house and vehicles as of public
record. Given the unanswered question as to whether the true
owner of each of those assets was the individual who was actually
listed in those records, or was in fact petitioner, we do not
believe that Cox had such a firm indication of fraud that
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