Case Portfolio
Axia College University of Phoenix
Case 1:
Boulware vs. United States Government – 06-1509: March 3rd, 2008
Facts: Plaintiff, Michael Boulware is charged with criminal tax evasion and falsifying information on his income tax return documentation. He’s accused of moving funds from his corporation, HIE, where at that time he was founder, CEO and majority owner shareholder.
Issues: Michael Boulware seeks to prove that his company loss money and therefore had no profits to show for the taxable year in question. And as a result, he received distributions that were used as capital gains to increase his shares in stocks, which are not taxable.
Ruling: The court deemed Boulware’s evidence insufficient under the Miller Case. Boulware provided no substantial evidence that proved that the amounts which were diverted were intended be shown as a return of capital when filed.
Analysis: A distribution of property made by a corporation as it pertains to stock should be considered as and treated as “dividend” and should be listed on the gross income statement of the filer. The part that is not considered dividend to a shareholder is either nontaxable return of capital or a taxable capital gain, and that depends on the type of stock the shareholder has. The Government’s motion to bar Boulware’s evidence was granted on the basis of the return capital theory. A diversion of funds in any criminal proceeding is considered a return of capital only if the taxpayer proves distributions are intended to be returns.
Minority Rationale(s): This case rejected many attempts from the plaintiff to provide supported evidence due to his history in criminal proceedings.
Comments: The ruling for this case blocks loopholes for previous tax offenders so that they are not able to continue cheating the system.
Follow-up Questions
1) Hawaii
2) 2 years and eight months (from July 2005 until March 2008).
3) The Ninth Circuit Court of Appeals in San...