Boulware v. United States (2007)
- Docket
- 06-1509
- Decided
- 2007-01-01
Summary
Question: Does the return of capital rule apply automatically when a company without earnings or profits distributes money to a shareholder, or must the taxpayer produce contemporaneous evidence that the money was treated as a return of capital when distributed? Conclusion: A unanimous Court reversed Boulware's conviction for tax evasion. In an opinion written by Justice David Souter, the Court held that a defendant in a criminal tax case does not need to show a contemporaneous intent to treat diversions as returns of capital to demonstrate no taxes were owed. All that mattered, according to the Court, was whether the corporation had earnings or profits and the taxpayer's basis for his stock. Based on these considerations, the Court determined that there had been no improper action on Boulware's part.