Monday, March 3, 2008
The U.S. Supreme Court, with Justice Souter writing the unanimous opinion in Boulware v. United States, resolved the question of "whether a distributee accused of criminal tax evasion may claim return-of-capital treatment without producing evidence that either he or the corporation intended a capital return when the distribution occurred." The Court held that:
"Sections 301 and 316(a) govern the tax consequences of constructive distributions made by a corporation to a shareholder with respect to its stock. A defendant in a criminal tax case does not need to show a contemporaneous intent to treat diversions as returns of capital before relying on those sections to demonstrate no taxes are owed."
See also Paul Caron's Tax Prof Blog here.