CRIMINAL LAW AND PROCEDURE - STATUTES-CONSTITUTIONALITY OF CRIMINAL PENALTIES FOR UNREASONABLE DEDUCTIONS UNDER FEDERAL INCOME TAX STATUTE

Authors

William H. Shipley, University of Michigan Law SchoolFollow

Abstract

Defendant was indicted for attempting to evade the federal tax on the income of a certain corporation for the years 1933 to 1936. In providing for deductions from gross income, the statute permits a reasonable allowance for salaries or other compensation for personal services. The government charged that the defendant was a party to a fraudulent scheme whereby, under the guise of paying commissions for services, which commissions were · deducted from gross income, the corporation distributed profits to its stockholders. The trial court submitted to the jury the issue whether the deduction represented a reasonable allowance for the services rendered. The circuit court of appeals held that defendant could not be found guilty of criminal violation of the statute merely by virtue of payment of unreasonable compensation for services actually rendered, but only for deductions taken for payments made when no services were in fact rendered. Held, defendant may be found guilty if the payments were unreasonable, and it was not error to submit this issue to the jury. United States v. Ragen, 314 U.S. 513, 62 S. Ct. 374 (1942).

Recommended Citation

William H. Shipley, CRIMINAL LAW AND PROCEDURE - STATUTES-CONSTITUTIONALITY OF CRIMINAL PENALTIES FOR UNREASONABLE DEDUCTIONS UNDER FEDERAL INCOME TAX STATUTE, 41 Mich. L. Rev. 168 (1942).
Available at: https://repository.law.umich.edu/mlr/vol41/iss1/15