7201 case 11/1/2012

U.S. v. THREADGILL, Cite as 110 AFTR 2d 2012-XXXX, 11/01/2012

UNITED STATES of America, Plaintiff, v. John Oliver THREADGILL, Defendant.

Case Information:

Code Sec(s):      

Court Name:      United States District Court, E.D. Tennessee,

Docket No.:        No. 3:11-cr-86,

Date Decided:   11/01/2012.

Disposition:      

HEADNOTE

.

Reference(s):

OPINION

Frank M. Dale, Jr., U.S. Department of Justice, Knoxville, TN, for Plaintiff.

Dana C. Hansen Chavis, Federal Defender Services of Eastern Tennessee, Inc., Knoxville, TN, for Defendant.

United States District Court, E.D. Tennessee,

ORDER

Judge: THOMAS W. PHILLIPS, District Judge.

Before the Court is Defendant's Motion in Limine [Doc. 25.] and the Government's Motion for Rule 49.1 Exemption. [Doc. 29.]

I. Defendant's Motion in Limine

The Defendant, John Threadgill has moved that certain evidentiary matter be excluded from trail. The Court will address the Defendant's requests separately.

1. Defendant John Threadgill's Motion in Limine # 1

The defense argues that, since the Defendant is charged with evading the “assessment” of tax and not evading the “payment” of tax, any “testimony or documentary evidence, expert or lay opinion, or argument, that Threadgill's filed tax returns misstated his true tax obligations or were in someway (sic) incorrect or fraudulent is irrelevant to the charged offense.... Such evidence would distract the jury from the questions to be decided in this case and unfairly prejudice the [D]efendant.” [Doc. 25. ¶ 11.] The Government concedes Mr. Threadgill is charged with evasion of the assessment, not payment, of his tax obligation. Nevertheless, the Government argues that “the limitation sought by the [D]efendant would inhibit the Government's ability to offer evidence of evasion of payment if such evidence could also demonstrate evasion of assessment.

Defendants' Motion to exclude evidence of his misstated tax obligations is DENIED. In order to establish a violation of 26 U.S.C. § 7201, the Government must prove the following three elements: (1) willfulness; (2) the existence of a tax deficiency; and (3) an affirmative act constituting an evasion or an attempted evasion of the tax. Kawashima v. Holder, --- U.S. ----, 132 S.Ct. 1166, 182 L.Ed.2d 1 (U.S.2012) (citingBoulware v. United States , 552 U.S. 421, 424 [101 AFTR 2d 2008-1065], 128 S.Ct. 1168, 170 L.Ed.2d 34 (2008)). Consequently, the Government must bear the burden of proving that Mr. Threadgill did not make an “innocent error” and that his violation of the law was willful. Id. Similarly, in Cheek v. United States, the Supreme Court held that a defendant may argue, ineffort to defeat the willfulness element of 26 U.S.C. § 7201, that “innocent errors were made despite the exercise of reasonable care.” 498 U.S. 192, 205 [67 AFTR 2d 91-344], 111 S.Ct. 604, 112 L.Ed.2d 617 (1991).

In order to meet the Government's burden, the Government must offer evidence to demonstrate Mr. Threadgill's mental state at the time the § 7201 offense occurred. To that end, evidence, whether documentary, testimonial, or expert, that establishes that Mr. Threadgill willfully mislead the IRS is more than relevant; in fact, such evidence would be necessary to prove an essential element of the offense in question.

Furthermore, applying Rule 404(b) of the Federal Rules of Evidence to the facts of this case, the Government may not introduce “evidence of extrinsic acts that might adversely reflect on the [defendant]'s character, unless that evidence bears upon a relevant issue in the case such as motive, opportunity, or knowledge.” Huddleston v. United States, 485 U.S. 681, 686, 108 S.Ct. 1496, 99 L.Ed.2d 771, (1988). Although “other act” evidence is inadmissible to prove propensity, such evidence is admissible if it is “probative of a material issue other than character.”Id. Rule 404(b) “does not apply to evidence of uncharged offenses committed by a defendant when those acts are intrinsic to the proof of the charged offense.”United States v. Gibbs , 190 F.3d 188, 217 (3d Cir.1999). To be admissible, “other act” evidence must be intrinsic or probative of a material issue, other than character, such as “motive, opportunity, intent, preparation, plan, knowledge, identity or absence of mistake or accident.”Huddleston , 485 U.S. at 686.

The Government will not be permitted to offer evidence of the Defendant's previous misstatements to the IRS as evidence of bad character; however, the Government may offer such evidence to establish the “willfulness” element of § 7201. Additionally the Government may offer evidence of the Defendant's prior misstatements in order to prove motive, opportunity, intent, preparation, plan, knowledge, identity or absence of mistake or accident so long as the Government conforms to the notice requirement of Fed.R.Evid. 404(b).

2. Defendant John Threadgill's Motion in Limine # 2

Next, the Defendant argues that “testimony or documentary evidence as to how Threadgill spent the money that passed through his hands is irrelevant to the charged crime as detailed in the indictment....Further, such evidence could then to rouse the jury against the defendant for his profligate spending ...” [Doc. 25. ¶ 12.]

In United States v. Abboud, the Sixth Circuit held that evidence of the Defendant's wealth or extravagant spending can be used to prove motive in tax fraud when the Defendant has first placed this motive in issue. 438 F.3d 554, 585 [97 AFTR 2d 2006-1142] (6th Cir.2006). However, prosecutorial misconduct has been found when class bias is used to merely to inflame the jury.Sizemore v. Fletcher , 921 F.2d 667 (6th Cir.1990). Here, as mentioned above, the Defendant's motive, or mental state, is an essential element of the offense. The Federal Rules of Evidence permit the inclusion of evidence of “other acts” when such acts are probative of a material issue other than character. Fed.R.Evid. 404(b).

At this time, the Defendant's objection to the Government's hypothetical evidentiary submission is both premature and overbroad. The Government cannot be denied the opportunity to prove an essential element of their case. Deciding whether a particular piece of evidence is prejudicial, irrelevant, or essential requires that the Court know specifically what evidence is being offered as well as the purpose for which it is being offered. Since the Court lacks the requisite context to render a decision at this time, the Defendant may renew the objections to specific evidence at the time of trial when the court has Specific evidence before it.

However, without knowing the specific acts that the Government intends to introduce, ruling on the admissibility of such acts is, at this time, premature. Consequently, the Defendant's Motion to exclude evidence of his expenditures is Denied as premature and overbroad. This Court is not compelled to issue a blanket ruling on all such evidence in advance of trial. The Defendant may renewthe objections to specific evidence at the time of trial when the court has specific evidence before it.

3. Defendant John Threadgill's Motion in Limine # 3

The Defendant further argues that the Government should not be permitted to present evidence of Mr. Threadgill's prior criminal conduct or bar disciplinary procedures that were instituted against him. The Defendant argues that both matters are irrelevant to the present offense and would unduly prejudice Mr. Threadgill. At this time, the Court will reserve its ruling on whether bar disciplinary proceedings or criminal or civil charges are admissible, unduly prejudicial or irrelevant. Evidence which is not admissible for one purpose may be relevant and admissible for another. Without knowing the specific evidence that the Government intends to submit, and the purpose for which it is being submitted, the Court is unable to determine if such evidence is proper. Consequently, the Defendants Motion to exclude evidence of his prior criminal conduct or interactions with the bar is RESERVED. The Defendant may renew the objections to specific evidence at the time of trial when the court has specific evidence before it.

4. Defendant John Threadgill's Motion in Limine # 4

The Defendant seeks to exclude evidence of his outstanding debts, including unpaid debts to employees as irrelevant and prejudicial. As mentioned above, the Government may not introduce “evidence of extrinsic acts that might adversely reflect on the [defendant]'s character, unless that evidence bears upon a relevant issue in the case such as motive, opportunity, or knowledge.” Huddleston v. 485 U.S. at 686. Evidence which is not admissible for one purpose may be relevant and admissible for another. Without knowing the specific evidence that the Government intends to submit, and the purpose for which it is being submitted, the Court is unable to determine if such evidence is proper. Consequently, the Defendants Motion to exclude evidence of his prior criminal conduct or interactions with the bar is RESERVED. The Defendant may renew the objections to specific evidence at the time of trial when the court has specific evidence before it

5. Defendant John Threadgill's Motion in Limine # 5

The Defendant moves to exclude evidence of “certain documents” from a tax court proceeding held against the Defendant in 1992. The Defendant's request is overbroad. The phrase “certain document” is too ambiguous to be intelligibly ruled upon by this Court. This Court is not compelled to issue a blanket ruling on all documentary evidence; consequently, the Defendant's Motion to exclude “certain documents” from the 1992 tax court proceeding is DENIED as overbroad.

II. Motion for Rule 49.1 Exemption

The Government moves that it be permitted an exemption from the redaction requirement of Rule 49 of the Federal Rules of Criminal Procedure. [Doc. 29.] More specifically, the Government requests that bank account numbers that are present in financial documents that the Government intends to offer into evidence not be redacted. In support of its position, the Government alleges that “redacting all financial account numbers would require the review of thousands of pages of documents;” furthermore, the Government alleges that the bank accounts at issue are “presumably now defunct in light of the defendant's (sic) disbarment.” Id. at 2. In the event that the Government discovers an account that is still active, the Government maintains “no objection to such documents being received under seal.”

Rule 49.1 holds that, “[u]nless the court orders otherwise, in an electronic or paper filing with the court that contains and individual's ... financial-account number ... [of] a party or non-party making the filing may only include ... the last four digits of the financial-account number. Fed.R.Crim.P. 491(a). Local Rule 83.3 holds that “Counsel shall endeavor to protect the private or personal information of jurors and witnesses, such as the identification of minors, financial account information ... to the extent practicable. Trial exhibits are subject to the redaction requirements of Rule 49.1 to the extent they are filed with the Court; trial exhibits that are not initially filed with the court must be redacted in accordance with the rule if and when they are filed as part of anappeal or for other reasons. Footnote 1. Advisory Committee Note to Fed.R.Crim.P. 49.1. Furthermore, “the court may order that a filing be made under seal without redaction. The court may later unseal the filing or order the person who made the filing to file a redacted version for the public record.” Fed.R.Crim.P. 49.1(d).

Rule 49.1(b) describes several exemptions from the redaction requirements of 49.1(a); however, none of the enumerated exemptions apply to the present question. When examining the purpose behind Rule 49.1, the Court turns to the Advisory Committee Note accompanying the rule. “this rule is adopted in compliance with section 205(c)(3) of the E-government Act of 2002 ... requires the Supreme Court to prescribe rules “to protect privacy and security concerns relating to electronic filing of documents and the public availability....of documents filed electronically.” The rule goes further than the E-Government Act in regulating paper filings even when they are not converted to electronic form.” Footnote 1. Advisory Committee Note to Fed.R.Crim.P. 49.1.

Fundamentally, Rule 49.1 is designed to protect privacy. In the present case, the government states that the back accounts are “presumably now defunct;” nevertheless, the Court cannot expose the Defendant to potential constitutional violations of his privacy on the presumption that his bank accounts have closed. Consequently, the Court finds that the Government's Motion for Rule 49.1 Exemption [Doc. 29.] is DENIED. However, understanding the burden of examining thousands of pages for redactable content, the Court further orders that the documents that contain financial-account information be FILED UNDER SEAL. If and when the Government seeks to introduce into evidence materials that contain financial-account information, the status of those accounts can be examined individually to insure that only closed accounts will be publically disclosed. In the event that an account is discovered to be active, the Government must comply with Rule 49.1 and redact all but the final four digits of an active bank account.

IT IS SO ORDERED.

www.irstaxattorney.com (212) 588-1113 ab@irstaxattorney.com

Tangible property capitalization of expenditures

Notice 2012-73, 2012-51 IRB, 11/20/2012, IRC Sec(s).

---

Headnote:

Reference(s):

Full Text:

Purpose

This notice alerts taxpayers that the Internal Revenue Service and the Treasury Department expect to issue final regulations regarding the deduction and capitalization of expenditures related to tangible property in 2013, and that the Service and the Treasury Department anticipate that the final regulations will contain changes from the temporary regulations (T.D. 9564, 76 Fed. Reg. 81060-01 [2012-14 I.R.B. 614]). The Service and the Treasury Department anticipate that the final regulations will apply to taxable years beginning on or after January 1, 2014, and will permit taxpayers to apply the final regulations to taxable years beginning on or after January 1, 2012. This Notice also advises taxpayers that shortly after publication of this Notice the Service and the Treasury Department will publish in the Federal Register a Treasury Decision amending the temporary regulations to apply to taxable years beginning on or after January 1, 2014, while permitting taxpayers to apply the temporary regulations for taxable years beginning on or after January 1, 2012, and before the applicability date of the final regulations.

Background

On March 10, 2008, the Service and the Treasury Department issued proposed regulations regarding the deduction and capitalization of expenditures related to tangible property (2008 proposed regulations) in the Federal Register (REG-168745-03, 73 Fed. Reg. 12838-01 [2008-18 I.R.B. 871]). The Service and the Treasury Department received numerous written comments on the 2008 proposed regulations and held a public hearing on June 24, 2008.

On December 27, 2011, after considering the written comments and the statements at the public hearing, the Service and the Treasury Department published temporary regulations regarding the deduction and capitalization of expenditures related to tangible property in the Federal Register (T.D. 9564). The Service and the Treasury Department also withdrew the 2008 proposed regulations and published proposed regulations (REG-168745-03, 76 FR 81128-01 [2012-14 I.R.B. 718]) (the 2011 proposed regulations), which cross-referenced the text of the temporary regulations. The temporary regulations generally apply to taxable years beginning on or after January 1, 2012.

The Service and the Treasury Department received numerous written comments on the 2011 proposed regulations and held a public hearing on May 9, 2012. The Service and the Treasury Department are considering the written comments received as well as the statements from the public hearing.

Discussion

In 2013, the Service and the Treasury Department expect to publish final regulations on the tax treatment of amounts paid to acquire, produce, or improve tangible property under sections 162 and  263(a), and on the accounting for, and disposition of, property subject to section 168. The Service and the Treasury Department expect the final regulations to apply to taxable years beginning on or after January 1, 2014, and to permit taxpayers to apply the provisions of the final regulations to taxable years beginning on or after January 1, 2012.

Recognizing that taxpayers are expending resources to comply with the temporary regulations, the Service and the Treasury Department are notifying taxpayers that certain sections of the temporary regulations, including the sections listed below, may be revised in a manner that might affect, and in certain cases simplify, taxpayers' implementation of the rules when the regulations are issued in final form.

• De Minimis Rule: § 1.263(a)-2T(g);Dispositions: § § 1.168(i)-1T and 1.168(i)-8T; and
• Safe Harbor for Routine Maintenance:  § 1.263(a)-3T(g).

The revisions being contemplated by the Service and the Treasury Department take into consideration all comments received, including comments requesting relief for small businesses.

Shortly after publication of this Notice, the Service and the Treasury Department will publish in the Federal Register a Treasury Decision amending the temporary regulations to apply to taxable years beginning on or after January 1, 2014, while permitting taxpayers to choose to apply the temporary regulations to taxable years beginning on or after January 1, 2012, and before the applicability date of the final regulations.

Taxpayers choosing to apply the provisions of the temporary regulations to taxable years beginning on or after January 1, 2012, and before the applicability date of the final regulations may continue to obtain the automatic consent of the Commissioner of Internal Revenue to change their methods of accounting under Revenue Procedures 2012-19, 2012-14 I.R.B. 689, and 2012-20, 2012-14 I.R.B. 700. For taxpayers choosing to apply the provisions of the final regulations to taxable years beginning on or after January 1, 2012, the Service and the Treasury Department expect to publish procedures for obtaining automatic consent to change a method of accounting when the final regulations are published.

Contact Information

For further information concerning this notice, contact Merrill D. Feldstein or Alan S. Williams, Office of Associate Chief Counsel (Income Tax & Accounting), (202) 622-4950 (not a toll-free call).

www.irstaxattorney.com (212) 588-1113 ab@irstaxattorney.com

6015(f) equitable relief - innocent spouse

KARAM v. COMM, Cite as 110 AFTR 2d 2012-XXXX, 11/05/2012

THERESA KARAM, Petitioner-Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.
Case Information:

Code Sec(s):
Court Name: UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT,
Docket No.: No. 11-2633,
Date Decided: 11/05/2012.
Prior History:
Disposition:
HEADNOTE

.

Reference(s):

OPINION

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT,

ON APPEAL FROM THE UNITED STATES TAX COURT

BEFORE: SUTTON and GRIFFIN, Circuit Judges; and WELLS, District Judge. *

Judge: GRIFFIN, Circuit Judge.

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION

Theresa Karam appeals a judgment of the United States Tax Court finding her ineligible for equitable relief under § 6015(f) 1from joint and several liability for federal income tax deficiencies on three years of joint returns she filed with her husband. The tax court denied Karam equitable relief based on its finding that she had reason to know that the taxes would not be paid when the couple filed their returns, significantly benefitted from the nonpayment, and suffered no economic hardship from being held jointly and severally liable with her husband. Finding no abuse of discretion, we affirm.

I.

Petitioner Theresa Karam has been married to James Karam since 1980. Theresa is the director of special education for a public school district and has worked there since 1981. She holds a Ph.D. in educational psychology and her current gross income is about $8,000 per month. She began her doctorate program in 1997, taking classes for the next seven years until she completed her dissertation and received her doctoral degree. James is a self-employed dentist who has operated his own practice since 1985. The Karams have four adult sons, each of whom received their primary and secondary education in parochial schools. Theresa Karam regularly sends her adult children money for living expenses after she pays for utilities, groceries, clothing, healthcare premiums for the entire family, and car insurance premiums for the family's four vehicles.

The Karams have used an accountant to file joint federal income tax returns since they were married. However, in 1997, following the death of their long-time accountant, James Karam retained Theodore C. Schumann, P.C., C.P.A., doing business as Dental Business Services, Inc. (the “Schumann firm”), to take over the family's accounting and taxes. Although James provided the Schumann firm with tax documentation necessary to timely prepare their tax returns, the firm was delinquent in preparing the Karam's tax returns for the years 1998, 1999, 2000, and 2001. The Karams later discovered that the accountant assigned to their file was ill, and the firm never had another accountant prepare their returns.

In August 2002, IRS Officer Sharon Sloan demanded that the Karams file their delinquent income tax returns or face a financial records subpoena. Thereafter, the Schumann firm finally delivered joint income tax returns for the Karams to sign. Attached to each return was a note saying “please sign.” Theresa Karam alleges that she had to sign the returns as presented and was unaware that she could decline to file a joint return and instead file as “married filing separately.” The Schumann firm never advised her with respect to the tax consequences of filing a joint return. She nevertheless signed each of the four returns, and the Schumann firm filed them with the IRS.

The returns for 1999, 2000, and 2001 showed balances due. Exclusive of penalties and interest, the Karams owed a total of $197,302 in unpaid income taxes for those three years. The deficiency resulted from the Karams' failure to pay estimated tax on the dental business income earned between 1999 and 2001. Shortly after the Karams filed their delinquent returns, the IRS recorded a tax lien against their real property.

In August 2006, Theresa Karam sued the Schumann firm in Michigan state court, alleging that the firm's negligence and breach of contract resulted in her joint and several liability for federal income taxes. The case was ultimately settled, with a payment of $150,000 to petitioner. After paying attorney's fees and costs, Karam offered the IRS the remaining balance of $99,186 to settle her outstanding tax liability. Pursuant to administrative procedure, Karam was required to deposit twenty percent of her offer with the IRS, which she did. However, the IRS ultimately rejected Karam's settlement offer and kept her $19,837 deposit. 2

In November 2008, Theresa Karam submitted a Form 8857 Request for Innocent Spouse Relief to the IRS, requesting relief from joint and several liability for the tax deficiencies arising from the joint returns for 1999, 2000, and 2001. After analyzing Karam's eligibility for relief under § 6015(b), (c), and (f), the Commissioner denied her request. Karam challenged the Commissioner's denial in the United States Tax Court, but only on the ground that she was entitled to equitable relief under § 6015(f). 3 Following a bench trial in which Theresa and James Karam both testified, the tax court issued a written opinion affirming the Commissioner.Karam v. Comm'r , 102 T.C.M. (CCH) 311, 2011 WL 4448937 (T.C. 2011). Karam timely appealed.

II.

We review the tax court's decision not to award equitable relief under § 6015(f) for an abuse of discretion.Greer v. Comm'r , 595 F.3d 338, 344 [105 AFTR 2d 2010-977] (6th Cir. 2010). The tax court abuses its discretion when it relies on clearly erroneous findings of fact; improperly applies the law; uses an erroneous legal standard; or bases its decision on a clearly erroneous assessment of the evidence. Id.

Karam argues the tax court abused its discretion in denying her equitable relief under § 6015(f). The Commissioner responds that the tax court's decision in this fact-intensive case is well supported and should be affirmed. We agree with the Commissioner.

Section 6015(f) provides that the Commissioner may grant a spouse relief from joint and several liability on a joint income tax return where it is inequitable to hold the requesting spouse liable. The statute provides: “Under procedures prescribed by the Secretary, if ... taking into account all the facts and circumstances, it is inequitable to hold the individual liable for any unpaid tax or any deficiency (or any portion of either) ... the Secretary may relieve such individual of such liability.” 26 U.S.C. § 6015(f)(1). “[S]ubsection (f) does not require the IRS to grant relief even to an applicant who fully satisfies the criteria set out in the subsection; for it states that if those criteria are satisfied the Service may relieve such individual of such joint-filer liability.” Lantz v. Comm'r, 607 F.3d 479, 485 [105 AFTR 2d 2010-2780] (7th Cir. 2010) (internal quotation marks and brackets omitted).

The Commissioner has prescribed procedures applicable to requests for equitable relief under § 6015(f) in Revenue Procedure (“Rev. Proc.”) 2003-61, 2003-32 I.R.B. 296. Section 4.03(2)(a) of Rev. Proc. 2003-61 details the following nonexclusive list of factors that should be considered in determining whether § 6015(f) relief is warranted: (1) marital status, (2) economic hardship that would result absent relief, (3) knowledge or reason to know of the deficiency, (4) any legal obligation of the nonrequesting spouse to pay the income tax liability pursuant to a divorce agreement, (5) whether the requesting spouse significantly benefitted from the unpaid tax liability, (6) the requesting spouse's compliance with income tax laws since the years in question, (7) spousal abuse, and (8) poor mental and physical health. Id. The spouse requesting equitable relief bears the burden of proof.Greer , 595 F.3d at 344.

In reviewing Karam's § 6015(f) claim, the tax court determined that factors (4), (7), and (8) were neutral in its analysis and factor (6) weighed in favor of relief because she has complied with federal income tax laws since 2001.Karam , 2011 WL 4448937 [TC Memo 2011-230] at 5–6. Neither party challenges those findings. Furthermore, the Commissioner now concedes that factor (1) is neutral because the Karams remain married. Consequently, the parties' arguments focus on the remaining factors and an unenumerated factor that Karam claims the tax court failed to address. 4

Starting with factor (2), an “economic hardship” exists if satisfaction of the deficiency, in whole or in part, “will cause an individual taxpayer to be unable to pay his or her reasonable basic living expenses.” Treas. Reg. § 301.6343-1(b)(4)(i). 5“The determination of a reasonable amount for basic living expenses will ... vary according to the unique circumstances of the individual taxpayer.” Id. The Treasury Regulations supply a variety of factors that are to be considered in evaluating a taxpayer's individual circumstances.Id. at § 301.6343-1(b)(4)(ii).

The tax court found that Karam could not establish economic hardship because she failed to demonstrate that her entire monthly salary was spent on reasonable basic living expenses.Karam , 2011 WL 4448937 [TC Memo 2011-230] at 4. First, it rejected Karam's unsubstantiated assertion that she had no money left at the end of the month to satisfy any portion of her tax liabilities. Id. Second, the court disagreed with Karam's legal proposition that her reasonable basic living expenses included the payment of her adult children's living expenses. Id. Ultimately, the tax court found that, although Karam “may not have the means to pay all the tax liabilities at once [,] ... she can meet her basic living expenses while making periodic payments against her tax liabilities.” Id.

Karam argues that this factual determination is clearly erroneous because her testimony shows that she cannot afford to pay any portion of the tax liability after paying for her reasonable basic living expenses. Her $8,000 per month gross income is reduced by: (1) $2,800 in tax witholdings; (2) $160 in health insurance premiums for a “family” policy that covers herself, her husband, and their two youngest adult children; and (3) $1,300 in health insurance premiums for her two oldest sons who are both ineligible under the other policy. Karam uses the remaining balance to pay for utilities, groceries, car insurance (which covers her adult children), medical co-pays, doctor visits, and miscellaneous living expenses for her sons. She also claims the federal tax lien contributes to an overall economic hardship.

We find no clear error in the tax court's determination on this factor. Economic hardship exists only where a taxpayer is unable to pay federal tax liabilities “in whole or in part,” meaning that a taxpayer who can pay anyportion of her liabilities after paying for reasonable basic living expenses, cannot satisfy this factor. Treas. Reg. § 301.6343-1(b)(4)(i). Here, Karam admits to spending a large portion of her monthly income on health and car insurance and living expenses for her four adult children. Nothing in the applicable procedures or regulations suggests that the payment of such expenses should be included as part of Karam's own reasonable basic living expenses. Accordingly, those funds are available, at least in part, to satisfy her outstanding tax liabilities.

Additionally, her admission that she is using the remaining $80,000 from the settlement with the Schumann firm to finance this litigation further undermines her claim for relief. Karam questionably asserts “economic hardship” while possessing a large litigation fund that she could use to make partial payments on her tax debt. The equities of the situation are not in her favor. Moreover, Karam's argument that the tax lien affects her credit rating and her ability to find different employment or sell her real property is unpersuasive. She does not explain how those concerns actually deprive her of the ability to afford her own reasonable basic living standards while paying even a portion of her delinquent taxes on her $8,000 a month salary. Karam therefore has failed to show that the tax court clearly erred or abused its discretion in finding that factor (2) weighed against relief.

Turning to factor (3), in determining whether Karam had “reason to know” her husband would not pay the three years of deficiencies, we consider her individual circumstances and whether a reasonable person in her position could be expected to know of an inability or unwillingness to pay. Alt v. Comm'r, 101 F. App'x 34, 41 [93 AFTR 2d 2004-2561] (6th Cir. 2004) (citingShea v. Comm'r , 780 F.2d 561, 566 [57 AFTR 2d 86-625] (6th Cir. 1986)). Karam's circumstances are defined by examining her: (1) level of education, (2) any deceit or evasiveness of her husband, (3) degree of involvement in the activity generating the income tax liability, (4) involvement in business and household financial matters, (5) business or financial expertise, and (6) lavish or unusual expenditures compared with past spending levels. Rev. Proc. 2003-61 § 4.03(2)(a)(iii)(C); 2003-32 I.R.B. 296.

The tax court found Karam had reason to know that, at the time she signed the returns for 1999, 2000, and 2001, her husband would not pay their joint tax liabilities. The court explained, “[a]s a result of filing three returns in a single year, the Karams suddenly faced a very large total tax liability” of over $197,000, plus interest and penalties, an amount much greater than what they had owed in prior years.Karam , 2011 WL 4448937 [TC Memo 2011-230] at 4. It also found that Karam “was very involved in the family's finances and was well aware of her husband's financial obligations and thus of his inability to pay a large tax bill.” Id. at 5. This factor weighed against relief because Karam's “knowledge of the family finances and the family's obligations should have put her on notice that [her husband] would not pay the tax liabilities.” Id.

Karam argues that the tax court's finding is clearly erroneous. She claims there is no factual support for the conclusion that she was “very involved” in family finances, that she knew of her husband's financial obligations, or his inability to pay a $197,000 tax bill. She also notes she has no training or experience in accounting or taxes, though she does have a Ph.D.

Following our review, we conclude that the tax court did not clearly err in finding that Karam had reason to know that her husband would not pay their joint tax liabilities. The tax court reasonably rejected as not credible Karam's alleged belief that her husband would pay $197,000 in 2002. As the tax court noticed, this amount far exceeded the taxes due in prior years. Its finding that Karam was “very involved” in the family's finances is anchored in the record: she knew of, and was partially responsible for, the family's financial obligations, and she also knew that her husband was paying a large portion of their family's expenses during 1999 through 2001.

More importantly, Karam knew at the time the returns were signed that her husband would have difficulty paying. On the Form 8857, in response to the question “When any of the returns were signed, were you having financial problems (for example, bankruptcy or bills you could not pay)?” she checked the box for “Yes,” stating “We had household bills we could not pay.” Her response supplies a “reason to know” that her husband could not pay a tax bill in 2002 that was nearly five times larger than their usual annual bill. This conclusion is further supported by the general proposition that “a requesting spouse's knowledge of the couple's financial difficulties deprives the requesting spouse of reason to believe that her spouse will pay the tax.” Id. (citingStolkin v. Comm'r , 96 T.C.M. (CCH) 143, 2008 [TC Memo 2008-211] WL 4107826 (T.C. 2008); Gonce v. Comm'r, 94 T.C.M. (CCH) 433, 2007 [TC Memo 2007-328] WL 3225063 (T.C. 2007); Butner v. Comm'r, 93 T.C.M. (CCH) 1290, 2007 [TC Memo 2007-136] WL 1574951 (T.C. 2007).

We further note that, although Karam stated in an attachment to her Form 8857, and in her tax court petition, that her husband had assured her that he would pay the entire liability for the years in question, during the trial, neither Karam nor her husband testified to that assurance. The absence of proof on this matter further undercuts Karam's “reason to know” argument. Accordingly, the tax court did not err in finding that factor (3) does not favor relief.

The final disputed factor asks whether Karam received a “significant benefit” from the unpaid income tax liability. “A significant benefit is any benefit in excess of normal support.” Treas. Reg. § 1.6015-2(d). 6 The benefit may be direct or indirect. Id. “Normal support” is determined by the circumstances of the taxpayer. Thomassen v. Comm'r, 101 T.C.M. (CCH) 1397, 2011 WL 1518446, 13 (T.C. 2011). In determining whether Karam significantly benefitted from the unpaid tax liabilities, we consider whether the couple was able to make expenditures in the taxable years in question that they otherwise would not have been able to make. See Levy v. Comm'r, 89 T.C.M. (CCH) 1101, 2005 [TC Memo 2005-92] WL 950116, 14 (T.C. 2005)

The tax court found that Karam received at least two significant benefits from not paying federal income taxes. First, it determined that since her husband's dental practice covered “all household expenses other than the groceries and clothing paid for by [Karam],” that “allowed [her] to use her salary to pay her Ph.D. expenses.”Karam , 2011 WL 4448937 [TC Memo 2011-230] at 5. Second, it found that the untaxed income from the dental business paid for their children's private school tuition at the primary and secondary levels. Id.

The parties exhaustively dispute whether Karam received a significant benefit by her husband paying for private school for their children. In this regard, the tax court recently observed that “the payment of private elementary or secondary school expenses of the requesting spouse's children generally has not been held to constitute a significant benefit ....”Thomassen , 2011 WL 1518446 [TC Memo 2011-88] at 14 (citingMarzullo v. Comm'r , 73 T.C.M. (CCH) 2993, 1997 [1997 RIA TC Memo ¶97,261] WL 311838 (T.C. 1997); Friedman v. Comm'r, 70 T.C.M. (CCH) 1491, 1995 [1995 RIA TC Memo ¶95,576] WL 710947 (T.C. 1995); Foley v. Comm'r, 69 T.C.M. (CCH) 1661, 1995 [1995 RIA TC Memo ¶95,016] WL 15090 (T.C. 1995)). The Karams testified at trial that sending their children to parochial school is normal in their household because they attended such schools and value the moral education received at such institutions. Given the Karam's testimony, and the tax court's position on the issue, we agree with Karam that her husband's payment of private school tuition should not be considered a “significant benefit” beyond “normal support.” Our agreement on this point does not change the conclusion that, as a whole, factor (5) does not favor relief.

Indeed, Karam fails to contest the tax court's finding that she significantly benefitted from receiving her Ph.D.See Thaddeus-X v. Blatter , 175 F.3d 378, 403 n.18 (6th Cir. 1999) (en banc) (appellant waives issues not contained in the opening brief). Although the payment of private school tuition for her children can reasonably be considered normal support under the circumstances, her receipt of a Ph.D. is not; it was a “significant benefit” obtained, at least in part, from the support provided by the untaxed income from her husband's dental practice. By having her husband pay living expenses, she could use her salary to pay her Ph.D. tuition and expenses in full, which she did. Moreover, shortly after obtaining her doctorate, she received a new supervisory position with her employer and a modest increase in compensation. Accordingly, factor (5) does not favor relief.

Karam next claims the tax court erred by not considering her argument that she “didn't know” the consequences of filing a joint tax return. The tax court did not specifically address this argument in its written opinion. However, the court “considered all arguments made, and, to the extent not mentioned, we conclude that they are moot, irrelevant, or without merit.” Karam, 2011 WL 4448937 [TC Memo 2011-230] at 6. The tax court—for good reason—likely rejected Karam's “I didn't know” argument as meritless. She has not offered any statutory or regulatory authority or any decisional law supporting her position that a requesting spouse's subjective understanding of the consequences of filing jointly is a relevant consideration. This is not surprising given the maxim “ignorance of the law is no excuse.” Beatty v. Comm'r, 93 T.C.M. (CCH) 1422, 2007 [TC Memo 2007-167] WL 1837128, 11 (T.C. 2007). Consequently, there is no legitimate basis for including Karam's alleged ignorance of the consequences of joint filing in the § 6015(f) analysis.

In sum, factors (1), (4), (7), and (8) are neutral, factor (6) weighs in favor of relief, and factors (2), (3), and (5) weigh against relief. Moreover, we agree with the tax court that the three factors against relief outweigh the sole factor in favor of relief. After carefully considering all the relevant facts and circumstances, we find neither a clear error in the tax court's findings of fact nor an abuse of discretion in its decision.

III.

For the foregoing reasons, we affirm.

*
  The Honorable Lesley Wells, Senior United States District Judge for the Northern District of Ohio, sitting by designation.
1
  Unless otherwise indicated, all statutory references are to the Internal Revenue Code (26 U.S.C.).
2
  Karam represents that she has been using the remaining balance to finance this case.
3
  Karam has therefore waived any claim for relief under § 6015(b) or (c).
4
  Karam's arguments under the proposed update to Rev. Proc. 2003-61 in IRS Notice 2012-8, 2012-4 I.R.B. 309, are irrelevant. The IRS issued Notice 2012-8 after the tax court entered its final judgment and after Karam filed her notice of appeal. The Notice does not instruct or suggest that the proposed update to Rev. Proc. 2003-61 be retroactively applied to a case already decided by the tax court and on appeal to a circuit court.
5
  Section 4.03(2)(a)(ii) defines economic hardship by cross-referencing § 4.02(1)(c), which in turn refers to Treas. Reg. § 301.6343-1(b)(4).
6
  Section 4.03(2)(a)(v) defines significant benefit by referencing Treas. Reg. § 1.6015-2(d).
© 2012 Thomson Reuters/RIA. All rights reserved.    |    Privacy Statement



www.irstaxattorney.com (212) 588-1113 ab@irstaxattorney.com

Taxpayer has a right to decide which stock he sells

HOWBERT v. PENROSE, Cite as 8 AFTR 10331 (38 F.2d 577), 02/05/1930

---

HOWBERT v. PENROSE.

Case Information:

[pg. 10331]

Code Sec(s):
Court Name:	U.S. Court of Appeals, Tenth Circuit.
Docket No.:	Nos. 1, 2.
Date Decided:	02/05/1930
Disposition:
Cites:	8 AFTR 10331, 38 F2d 577, 2 USTC P 472.

HEADNOTE

.

Reference(s):

OPINION

It seems that the plaintiff owned a large number of shares in the three copper companies which he acquired prior to 1913. He was one of the founders of the business, and he intended to keep these holdings as long as he lived. The certificates representing these shares were deposited for safekeeping with the Columbia Trust Company of New York City. In 1916 and 1917 he bought 2,000 additional shares in the Chino, 2,350 shares in the Ray Consolidated, and 1,000 shares in the Utah companies, on the market. For them he paid $268,981.25. The certificates representing these shares were delivered to the Columbia Trust Company, for safekeeping, and were commingled with the old certificates.

In 1918, plaintiff decided to sell the stock acquired in 1916 and 1917, one of the reasons being to enable him to deduct a loss in his 1918 return. He sold the exact number of shares purchased in 1916 and 1917, at an actual loss of $54,030.75. That such was the stock sold is evidenced by the books of his office, and also a pocket memorandum kept by himself. These sales were effected, as were the purchases, through the Colorado Springs office of a broker of the New York Stock Exchange. Delivery by the selling broker was effected by an order on the Columbia Trust Company. An employee of the trust company delivered, in most instances, certificates of the original stock owned by plaintiff, and not the certificates deposited in 1916 and 1917. The government declined to allow the loss incurred, but on the contrary charged plaintiff with a profit of $47,350.50, measured by the difference between the 1918 sale price and the 1913 value of the stock.

The trial court found as a fact from the evidence, that "plaintiff intended to and did sell" the shares acquired in 1916 and 1917. This finding is supported by the evidence, and cannot be disturbed. Dooley v. Pease, 180 U. S. 126, 21 S. Ct. 329, 45 L. Ed. 457; Stanley v. Supervisors of Albany County, 121 U. S. 535, 7 S. Ct. 1234, 30 L. Ed. 1000. The trial court likewise found—

"It has since been ascertained that in the case of many such sales, the certificates so delivered by said depositary were certificates held by plaintiff on March 1, 1913, and in other cases plaintiff is unable to identify the certificates delivered by the depositary on such sales, as those received by it on the purchases above found. In one case only, does the proof show that the certificates delivered on a sale were those actually received by the depositary on a purchase above found."

The contention of the collector is that the certificates delivered are conclusive as to the identity of the stock sold. Upon this, the trial court, in a memorandum opinion said:

"Where a party has held stock for many years, and later buys more, and in this case it is admitted that plaintiff bought a great deal more after 1913 than he sold in 1918, he has a right to decide which stock he is going to sell. The Government has not the power to say that if the taxpayer sells any of his holdings in a particular company, it can say conclusively that he sold the stock bought at the cheapest price or the shares purchased before or after a certain date. He has the right to decide that himself."

In our opinion, proof of the certificates delivered does not conclusively determine what transaction did in fact take place. It is evidence, but not exclusive evidence. So it is of the question of intent of the seller, a point much labored at the trial and here; it is some evidence as to what was done, but not conclusive. The ultimate question is, What was done? It was, and must be, readily conceded that if there had been a written contract of the sale of this stock, specifying "the shares purchased by me in 1916," and a clerk in the office of a trust company had delivered certificates acquired at an earlier date, the "identity of the lot" could be and would be determined by the contract. There being no applicable statute of frauds, the finding of the trial court, upon ample evidence, identifies the lot as well as a written contract. In the case at bar, the sale was consummated on the floor of the New York Stock Exchange. The plaintiff's broker, for the plaintiff, offered for sale a block of shares he purchased in 1916. True, the broker did no more than offer "1,000 shares of Chino Copper," but the finding is that this "1,000 shares of Chino Copper" was "the lot" acquired in 1916. Another broker accepted the offer for his customer. Neither the buying broker nor the customer knew or cared what "lot" was offered. A binding contract was made upon such acceptance, and legal results would flow from it, if no certificates [pg. 10333] were ever delivered. In re Columbus Buggy Co. (8 C. C. A.) 143 F. 859.

We are saved any inquiry into the abstruse question as to the exact quality of the transaction. In a very true sense, a stockholder of a corporation is an owner of an undivided interest in the properties of the corporation. The purchase of additional shares increases that ownership. When he sells shares, his ownership is lessened, and theoretically it might be difficult to identify the portion sold either as that acquired in 1916, as plaintiff claims, or that owned in 1913, as the defendant claims. But the tax laws are practical; consideration is given to the fact that men do buy stock in various lots, and sell them in the same way. Judge Learned Hand has said, on this point:

"The plaintiff answers this argument by saying that, if so, all shares at any time held by a stockholder must be brought into hotchpot and averaged. I scarcely think that consistency requires me to go so far. The law may, and in fact does, recognize an identity in every share, which can indeed be traced upon the books of the company, at least until certificates are consolidated, and later subdivided. The purchase of a number of shares can be earmarked by the certificate, and it is an enormous convenience to keep the purchases separate." Towne v. McElligott (D. C.) 274 F. 960, 963.

A theoretical plan might have been devised, by which an average cost or March 1, 1913, value of all shares owned should be ascertained as a starting point from which to figure profit or loss on sales. But the government adopted a more practicable method, and it is incorporated in Regulations 45, Article 39, which reads:

"When shares of stock in a corporation are sold from lots purchased at different times and at different prices and the identity of the lots cannot be determined the stock sold shall be charged against the earliest purchases of such stock. The excess of the amount realized on the sale over the cost of the stock, or its fair market values as of March 1, 1913, if purchased before that date, will be the profit to be accounted for as income."

Both parties agree that the regulation is a valid one, and it answers this law suit. The trial court has found, on sufficient evidence, that the "identity of the lots" can be and has been determined. This finding cannot be overturned because one piece of evidence—the certificates delivered—is to the contrary. Cases holding that a situs for the purpose of taxation may be acquired by the location of the certificates do not persuade. Safe Deposit & Trust Co. v. Virginia, 280 U. S. 83, 50 S. Ct. 59, 74 L. Ed. 180; Wheeler v. Sohmer, 233 U. S. 434, 34 S. Ct. 607, 58 L. Ed. 1030; De Ganay v. Lederer, 250 U. S. 376, 39 S. Ct. 524, 63 L. Ed. 1042; Maguire v. Trefry, 253 U. S. 12, 40 S. Ct. 417, 64 L. Ed. 739; Critchton v. Wingfield, 258 U. S. 66, 42 S. Ct. 229, 66 L. Ed. 467. That certificates of stock are but evidence of ownership, and that the ownership follows the owner, and not the certificates, is still a settled principle of our law. Blodgett v. Silberman, 277 U. S. 1, 9, 48 S. Ct. 410, 413, 72 L. Ed. 749, and cases therein cited. In that case it is held—

"At common law the maxim 'mobilia sequunter personam' applied. There has been discussion and criticism of the application and enforcement of that maxim, but it is so fixed in the common law of this country and of England, in so far as it relates to intangible property, including choses in action, without regard to whether they are evidenced in writing or otherwise and whether the papers evidencing the same are found in the state of the domicile or elsewhere, and is so fully sustained by cases in this and other courts, that it must be treated as settled in this jurisdiction whether it approve itself to legal philosophic test or not. Further, this principle is not to be shaken by the inquiry into the question whether the transfer of such intangibles, like specialties, bonds or promissory notes, is subject to taxation in another jurisdiction. As to that we need not inquire. It is not the issue in this case. For present purposes it suffices that intangible personalty has such a situs at the domicile of its owner that its transfer on his death may be taxed there."

See, also, Farmers' Loan & Trust Co. v. Minnesota, 280 U. S. 204, 50 S. Ct. 98, 74 L. Ed. 371, 65 A. L. R. 1000.

While the presence of certificates may, in some circumstances, afford a situs for taxation, it is still true, in law and fact, that "certificates are only evidence of the ownership of the shares" (Jellenik v. Huron Copper Mining Co., 177 U. S. 1, 13, 20 S. Ct. 559, 563, 44 L. Ed. 647), and they are but "a muniment of the holder's title to a proportionate interest in the corporate estate vested in the corporation." Harriman v. Northern Securities Co., 197 U. S. 244, 294, 25 S. Ct. 493, 504, 49 L. Ed. 739; 14 C. J. 478.

The judgment of the trial court is affirmed in case No. 1. [pg. 10334]

The second appeal is by the taxpayer, and grows out of the sale of stock in the Granite Gold Mining Company. He acquired this stock in 1915 and 1917, and sold it in 1918, for $20,045.58 less than he paid for it. Through clerical error, he claimed a loss of only $18,188.71 on this account. Penrose owned other stock in this company prior to 1913, and in auditing his 1918 return, the collector erroneously assumed that the certificates delivered were of old stock. It later developed that the collector was in error in this assumption, and it is now conceded, not only that the stock sold was that later acquired, but that the certificates delivered were of the later acquisition. So on the merits, it is clear that the taxpayer has paid $9,901.23 more tax than was due.

Recovery was denied by the trial court on the ground that no claim for refund was made on account of this stock. The loss on the Granite stock was claimed in his income tax return, although not identified by name. The amount paid under protest included the tax on this transaction, and the amount specified in the claim for refund, duly filed, included it. The statute provides that no suit shall be maintained "until a claim for refund or credit has been duly filed with the Commissioner of Internal Revenue." Section 3226, Rev. St., as amended (26 USCA § 156). It has been held that a claim "for amounts paid by it as taxes which *** it may have paid in excess of the amount legally due" is too general. Maryland Casualty Co. v. United States, 251 U. S. 342, 354, 40 S. Ct. 155, 159, 64 L. Ed. 297. The claim here, after setting out the amount, states:

(“1.) That the losses claimed by the taxpayer and disallowed by the Department for the taxable year 1918, were proper deductible losses and were improperly disallowed, as will more fully appear from the affidavit and evidence submitted by the taxpayer in connection with his plea for abatement of this tax.

(“2.) That the additional assessment was wholly unwarranted and illegal, and that the tax paid thereon was exacted illegally and without warrant of law."

If the record stopped here, the interesting question argued at length would be presented. But it does not stop. The record further discloses that in an appeal to the commissioner for relief from the proposed assessment, and again in a petition for rehearing, the taxpayer twice set out in detail his grievances; four transactions are gone into in detail, but the Granite stock is not mentioned. Although the record is not clear, it is probably true that a similar statement was attached as an exhibit to his claim for refund. The purpose of a claim is to advise the government of what you are claiming. Nichols v. United States, 7 Wall. 122, 19 L. Ed. 125. This claim, considered in the light of the attached exhibit and the detailed statement on appeal to the commissioner, cannot be held fairly to advise the government of the claim of the taxpayer for a refund on the Granite stock.

But defects in the claim may be waived. Tucker v. Alexander, 275 U. S. 228, 48 S. Ct. 45, 72 L. Ed. 253. When this suit was filed, on March 11, 1926, the plaintiff specifically set out his claims, including that for the Granite stock, and payment of the tax under protest in the sum of $85,799.04, which sum included the tax paid on account of the Granite stock. He then alleged:

"That thereafter, and on or about the 9th day of July, 1924, the plaintiff filed with the defendant his claim for refund for the tax wrongfully and unlawfully imposed upon him, and paid by him as aforesaid, which claim for refund was denied on or about the 2nd day of January, 1925."

The defendant was then advised that plaintiff proposed to prove a proper claim for refund for taxes paid on account of the Granite stock. The answer of the collector was filed on May 1, 1926. If the collector proposed to make an issue of the sufficiency of the claim for refund of the tax paid on the Granite stock, set out in detail in the complaint, fair pleading would have dictated an answer admitting the claim of refund as to the copper stocks, and denying it as to the Granite stock. Instead, the defendant answered:

"As to paragraph numbered XII of said amended complaint, the defendant admits that on or about the Ninth day of July, 1924, the plaintiff filed a claim for refund for the sum of $85,799.04 additional tax assessed for the year 1918, which claim for refund was denied on or about January 2, 1925."

The plaintiff claims that this admission removed the sufficiency of the claim from the field of controversy. The defendant claims that he simply admitted the existence of the claim, and that the claim itself must be looked to for the sufficiency of its contents.

Section 281(b) of the Revenue Act of 1924 (26 USCA § 1065 note) provides that [pg. 10335] no credit or refund shall be allowed unless claim therefor is made within four years of the payment of the tax; the 1926 law (§ 284(b), 26 USCA § 1065) is to the same effect, except the time is three years. If the defendant had challenged the sufficiency of the claim by his answer, the plaintiff had abundant time to supply the deficiency by a new or an amended claim. When the point was first raised at the trial, in October, 1928, both periods of limitation had expired.

The question is not free from doubt, but on the whole, we are of the opinion that the sufficiency of the claim for refund was not put in issue, and that the plaintiff is entitled to recover this tax. The defendant concedes that he is entitled to it on the merits; and while "men must turn square corners when they deal with the Government" (Rock Island, etc., R. Co. v. United States, 254 U. S. 141, 41 S. Ct. 55, 56, 65 L. Ed. 188), the government ought to turn square corners when dealing with its citizens. There is another maxim applicable in both of these appeals, and that is that substance should be given the right of way over form. Eisner v. Macomber, 252 U. S. 189, 40 S. Ct. 189, 64 L. Ed. 521, 9 A. L. R. 1570; Bowers v. Kerbaugh-Empire Co., 271 U. S. 170, 46 S. Ct. 449, 70 L. Ed. 886.

The claim for refund should have been more particular; but if the defendant expected to avoid the repayment of this illegally collected tax on that account, he should have been more particular in his answer. The derelictions of the parties are about equal, and if the matter is at large, the tax ought to be repaid, for concededly the government has no right to it.

The judgment denying the plaintiff relief in case No. 2 is reversed.

Since there are special findings of fact, not in dispute, there is no occasion for a new trial. Fort Scott v. Hickman, 112 U. S. 150, 5 S. Ct. 56, 28 L. Ed. 636; Rathbone v. Board of Com'rs (8 C. C. A.) 83 F. 125; Olivier v. Mt. Union Tanning & Extract Co. (3 C. C. A.) 264 F. 601; Walker v. Gulf & I. Ry. Co. of Texas (5 C. C. A.) 269 F. 885; Routzahn v. Mason (6 C. C. A.) 13 F.(2d) 702. Judgment should be entered for plaintiff for the sum of $9,901.23.

Affirmed in No. 1.

Reversed in No. 2.

COTTERAL, Circuit Judge, dissents in case No. 1.

© 2012 Thomson Reuters/RIA. All rights reserved.    |    Privacy Statement

www.irstaxattorney.com (212) 588-1113 ab@irstaxattorney.com