IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 12-20741

UNITED STATES OF AMERICA,

Plaintiff - Appellee,

v.

DAVID A. MONTGOMERY; BRIDGET M. MONTGOMERY,

Defendants - Appellants.

Appeals from the United States District Court

for the Southern District of Texas

Before JONES, ELROD, and HAYNES, Circuit Judges.

JENNIFER WALKER ELROD, Circuit Judge:

Following a jury trial, defendants David and Bridget Montgomery, 

husband and wife, were convicted of conspiracy to avoid federal income tax 

and of filing false tax returns. The Montgomerys argue on appeal that the 

district court incorrectly instructed the jury on the willfulness element of the 

charged tax offenses and incorrectly calculated the total tax loss resulting 

from the offenses. There being no reversible error, we AFFIRM.

I.

The Montgomerys owned and operated Montgomery’s Contracting 

L.L.C., a sole proprietorship that earned revenue by building churches and 

performing construction work for small businesses and residential properties. 

They also formed a church called the Restoration Temple Church of God in 

United States Court of Appeals

Fifth Circuit

FILED

March 28, 2014

Lyle W. Cayce

Clerk

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Christ (“Restoration Temple”), where Mr. Montgomery was the pastor. 

On December 20, 2010, a grand jury returned an indictment charging 

the Montgomerys with one count of conspiracy to defraud the United States 

by impeding, impairing, and obstructing the Internal Revenue Service (“IRS”)

in the ascertainment, computation, assessment, and collection of income 

taxes, in violation of 18 U.S.C. § 371 (“Count One”). The indictment also 

charged the Montgomerys with two counts of making and subscribing a false 

federal income tax return, for calendar years 2004 and 2005, in violation of 

26 U.S.C. § 7206(1) (“Counts Two and Three”). The Montgomerys pleaded 

not guilty and the case proceeded to trial. 

A three-day jury trial commenced on August 7, 2012.1 At trial, the 

government offered evidence showing that the Montgomerys had 

underreported the gross receipts of Montgomery’s Contracting on Schedule C 

of their joint federal income tax return by $1,066,012 for 2003, by $590,362 

for 2004, and by $485,613 for 2005, or $2.1 million total.2 The Montgomerys 

did not challenge these figures. Instead, the Montgomerys argued at trial 

that they had not willfully underreported the gross receipts of Montgomery’s 

Contracting. That is, they argued that they did not know that their actions

violated tax law.

The government attempted to show the jury that the Montgomerys, 

who operated a successful business for several years, were sophisticated 

taxpayers who knew how to manipulate their income in order to avoid paying 

taxes. The government offered evidence that the Montgomerys had concealed 

1 We view the evidence presented at trial “in the light most favorable to the jury’s 

verdict,” as we must. Baisden v. I’m Ready Productions, Inc., 693 F.3d 491, 504 (5th Cir. 

2012), cert. denied, 133 S. Ct. 1585 (2013).

2 Schedule C is a federal income tax return form in which the owner of a sole 

proprietorship must report the business’s gross receipts, deductible expenses, and the 

resulting net profit or loss for the tax year. The Montgomerys’ underreported gross receipts 

were essentially checks from their construction business clients. 

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Montgomery’s Contracting business receipts by depositing them in personal 

or Restoration Temple bank accounts and by transferring funds among their 

fourteen separate bank accounts. IRS Special Agent Robert Brown (“Agent 

Brown”) testified that the Montgomerys gave inconsistent answers when 

questioned about their business income and expenses.

Other evidence indicated that the Montgomerys had reported different 

levels of income in other endeavors, such as in a loan application or in 

paperwork submitted to car dealerships for automobile purchases, to suit 

their needs. For example, Mrs. Montgomery reported $127,274 of business 

income in a 2003 tax return that she submitted in a loan application. The 

Montgomerys’ actual tax return that they submitted to the IRS reflected 

$10,224 of business income. There were at least three other instances of 

similar behavior. The government also elicited testimony showing that 

between 2003 and 2006 the Montgomerys and their family members 

purchased and drove a number of cars, including a Lexus, Land Rover, 

Mercedes, Nissan, Jeep, BMW, Bentley, and two Infiniti models. 

To show that the Montgomerys were well aware of their duty to report 

the income, the government relied in part on the testimony of Clara 

Carrington, an accountant who prepared the Montgomerys’ tax returns from 

1997 to 2000. Carrington testified that while there are complexities 

associated with tax returns, “income” is not one of them. Carrington further 

testified that she advised the Montgomerys that they were required by law to 

report all of the income and expenses associated with Montgomery’s 

Construction. Carrington stopped preparing the Montgomerys’ tax returns 

after 2000 because she felt uncomfortable with the lack of information 

supplied by the Montgomerys. Thereafter, the Montgomerys used 

Carrington’s signature without her authorization when submitting their 2003 

and 2004 tax returns to the IRS.

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In his defense, Mr. Montgomery testified that he did not willfully

underreport the income from Montgomery’s Contracting or otherwise submit

false federal income tax returns. Mr. Montgomery testified that he had 

donated between 80% and 90% of his earnings to Restoration Temple and 

that he believed that any money that he donated to Restoration Temple was 

exempt from federal income taxes.3 He also testified that he believed that 

Restoration Temple could provide funds to its pastor for his general expenses.

To define the element of willfulness, Mr. Montgomery’s counsel

proposed a jury instruction pursuant to Cheek v. United States, 498 U.S. 192 

(1991), which provided in part:

A defendant does not act willfully if he believes in good faith that 

his actions comply with the law. Therefore, if the Defendant 

believed that what he was doing was in accord with the tax 

statutes, he cannot be said to have acted with criminal intent. 

Therefore, if you find that the Defendant honestly believed that 

he was not violating the tax laws, even if that belief was 

unreasonable or irrational, then you should find him not guilty. 

However, you may consider whether the Defendant’s belief was 

actually reasonable as a factor in deciding whether he held that 

good faith belief.

The government submitted a substantially similar jury instruction 

pursuant to Cheek:

A defendant does not act willfully if he believes in good faith that 

his actions comply with the law. If you find that the defendant 

honestly believed that he was not violating the tax laws, even if 

that belief was unreasonable or irrational, then you should find 

the defendant not guilty. However, you may consider whether 

the defendant’s belief was reasonable and rational as a factor in 

3 At trial, Agent Brown testified that, even if the Montgomerys had donated 90% of 

their earnings from Montgomery’s Contracting to Restoration Temple, they would have 

nevertheless been required to report those earnings on their federal income tax returns. 

The government further argued at trial that if the Montgomerys had put most of their 

money into Restoration Temple they would barely have enough money to pay the property 

taxes on their property and would not have enough money to live on.

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determining whether the defendant actually held that belief in 

good faith.

Then, over the Montgomerys’ objection, the district court instructed the 

jury, in pertinent part:

The Montgomerys must be found to have acted knowingly 

and willfully. “Knowingly” means that an act was done 

voluntarily and not because of mistake or accident. “Willfully”

means an act was done with a conscious purpose to violate the 

law. If you find that a defendant acted in good faith, you must 

acquit that defendant because his good faith is inconsistent with 

his having the intent to defraud or to violate the law.

The Montgomerys, of course, do not have to prove their 

good faith, since they do not have to prove anything. If the 

government establishes beyond a reasonable doubt that a 

defendant acted with specific intent to defraud, then that 

defendant could not have had good faith. If a defendant believed, 

in good faith, that what he was doing followed the tax law, he 

would not have had criminal intent.

Thus, although the district court instructed the jury that it must acquit if the 

Montgomerys acted in good faith, it did not say that Montgomerys’ beliefs

could be “unreasonable or irrational,” as both the government and Mr. 

Montgomerys’ counsel requested. The district court reasoned that doing so 

was unnecessary under Cheek and Fifth Circuit precedent.

The jury returned a verdict of guilty on all counts as to each defendant. 

The Montgomerys then filed a joint motion for a new trial based on the 

district court’s jury instruction. They argued, as they do now on appeal, that 

the jury instruction did not comport with Cheek. The district court denied 

the motion and the case proceeded to sentencing. 

At a joint sentencing hearing, the Montgomerys objected to the tax loss 

calculation in the pre-sentence investigation report (“PSR”). The PSR stated 

that the total “tax loss,” or the amount of the Montgomerys’ unpaid taxes

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resulting from their failure to report income, was $599,755.4 To arrive at 

that figure, the probation officer multiplied the underreported gross receipts 

from Montgomery’s Contracting for each year by an estimated tax rate of 

28%. Although the Montgomerys accepted the underreported gross receipts 

figures themselves, they argued that they should have been offset by 

Montgomery’s Contracting’s cost of goods sold, including the cost of 

construction materials and labor, and that as a result the tax loss was 

significantly overstated. Relying on a report prepared by Richard Jones, a 

certified public accountant (the “Jones Report”), the Montgomerys asserted

that the true total tax loss suffered by the IRS was in fact either $137,990 or 

$68,995, taking into account the cost of goods sold and other deductions. The 

government objected to the Montgomerys’ tax loss calculation, contending 

that it was speculative and not based on any actual business records. It 

therefore urged the district court to rely on the tax loss calculation contained 

in the PSR.

The district court agreed with the government and accepted the tax loss 

calculation contained in the PSR. Accordingly, the district court sentenced 

each defendant to 41 months of imprisonment as to Count One and 36 

months of imprisonment as to Counts Two and Three, each to run 

concurrently and followed by three years of supervised release. The district 

court also ordered restitution to the IRS in the amount of $550,000. The 

Montgomerys appealed. 

II.

The Montgomerys make two arguments on appeal. They argue that the 

district court incorrectly instructed the jury on the willfulness element of the 

4 Based upon a $599,755 tax loss, the Montgomerys’ base offense level was 20. 

Finding that the Montgomerys fell into criminal history category I, the PSR calculated that 

the range of imprisonment under the Sentencing Guidelines was 33 to 41 months. 

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charged tax offenses. They also argue that the district court’s tax loss 

calculation was significantly overstated and that as a result they received

higher sentences under the Sentencing Guidelines. 

A.

We first address the Montgomerys’ jury instruction argument. We 

review a properly preserved challenge to a jury instruction for abuse of 

discretion and consider “whether the instruction, taken as a whole, ‘is a 

correct statement of the law and whether it clearly instructs jurors as to the 

principles of law applicable to the factual issues confronting them.’” United 

States v. Aldawsari, 740 F.3d 1015, 1019 (5th Cir. 2014) (quoting United 

States v. Richardson, 676 F.3d 491, 506 (5th Cir. 2012)). But even if the jury 

instruction was erroneous, we will not reverse if, “in light of the entire record, 

the challenged instruction could not have affected the outcome of the case.’” 

United States v. Demmitt, 706 F.3d 665, 675 (5th Cir. 2013) (quoting Baisden,

693 F.3d at 504–05). We conclude that the district court’s jury instruction 

was erroneous; however, we nevertheless affirm because we are convinced 

that the error could not have affected the outcome of the case. 

Although ignorance of the law or a mistake of law generally does not 

provide a defense to criminal prosecution, that is not so with regard to federal 

tax offenses. Cheek, 498 U.S. at 199–200. “[D]ue to the complexity of the tax 

laws,” certain federal criminal tax offenses require, as an element of the 

offense, the establishment of a defendant’s willfulness. Id. at 200. In United 

States v. Pomponio, 429 U.S. 10, 12 (1976), the Supreme Court defined 

willfulness in this context as “a voluntary, intentional violation of a known 

legal duty.” 

Fifteen years later, in Cheek, 498 U.S. at 201, the Court clarified 

Pomponio’s definition of willfulness. There, the district court instructed the 

jury that an “honest but unreasonable belief is not a defense and does not 

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negate willfulness.” Id. at 197. The Supreme Court held that the district 

court’s instruction was incorrect. Id. at 202. It reasoned that the 

government cannot carry its burden to prove willfulness in a criminal tax 

prosecution if the jury believes that the defendant, in good faith, did not 

understand the law. Id. That is true regardless of “however unreasonable a 

court might deem such a belief.” Id.; see also United States v. Simkanin, 420 

F.3d 397, 410 (5th Cir. 2005) (“[A] defendant’s good-faith belief that he is 

acting within the law negates the willfulness element.”).

Here, the Montgomerys argue that the district court’s jury instruction

did not comport with Cheek because it did not advise the jury that a 

defendant’s good-faith misunderstanding of tax law may be objectively 

unreasonable. In response, the government argues that, despite the fact that 

its own proposed jury instruction included the unreasonableness language 

from Cheek, it was unnecessary in light of the Supreme Court’s decision in 

Pomponio, 429 U.S. 10, and our own decision in Simkanin, 420 F.3d 397. 

They reason that, pursuant to those decisions, where a district court correctly 

instructs the jury as to willfulness an additional instruction on the good-faith

defense is unnecessary. In any event, the government argues that the error 

was harmless due to the overwhelming evidence of the Montgomerys’ guilt. 

We agree with the Montgomerys that the jury instruction was 

erroneous. The import of Cheek, as applied to this case, is clear: if the 

Montgomerys truly believed that they were not obligated to report their 

income, then the jury could acquit, however objectively unreasonable the 

Montgomerys’ belief was. Both parties agreed to instruct the jury along those 

lines by explaining that the Montgomerys’ beliefs regarding tax law could be 

“unreasonable or irrational.” Yet the jury instruction, given sua sponte by the 

district court, did not explain that point. Rather, it only included a portion of 

Cheek’s good-faith defense: 

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If you find that a defendant acted in good faith, you must acquit 

that defendant because his good faith is inconsistent with his 

having the intent to defraud or to violate the law. . . . If a 

defendant believed, in good faith, that what he was doing 

followed the tax law, he would not have had criminal intent.

To be sure, defendants are not entitled to their exact choice of verbiage 

in a jury instruction. See United States v. Simmons, 374 F.3d 313, 319 (5th 

Cir. 2004). They are, however, entitled to a jury instruction that “correctly 

reflect[s] the issues and the law.” See United States v. McKinney, 53 F.3d 

664, 676 (5th Cir. 1995). The instruction here did not meet that standard—

the jury was left to decide the case bereft of a legal rule announced by the 

Supreme Court in a case that altered the landscape of federal tax 

prosecutions.

Moreover, by including but failing to explain the full breadth of Cheek’s 

good-faith defense, the district court’s jury instruction risked implying—in 

direct conflict with Cheek—that the Montgomerys could not be acquitted on 

the basis of good faith unless their views were objectively reasonable. See 

United States v. Morris, 20 F.3d 1111, 1118 (11th Cir. 1994) (holding that a

jury instruction compromised the appellants’ good-faith argument because it 

did not “make clear that a good-faith belief by the appellants that they were 

complying with the tax laws, whether or not objectively reasonable, negates 

the specific intent element”). That is because good faith is often equated with

reasonableness. See, e.g., Messerschmidt v. Millender, 132 S. Ct. 1235, 1245 

(2012) (explaining that the Supreme Court has referred to actions taken in an 

“objectively reasonable manner” as “objective good faith”); Newman v. 

Guedry, 703 F.3d 757, 764 (5th Cir. 2012), cert. denied, 134 S. Ct. 162 (2013)

(“Because the officers’ use of force was not objectively reasonable, it was not 

in good faith . . . .”); Mathis v. Exxon Corp., 302 F.3d 448, 455 (5th Cir. 2002)

(“Good faith includes observance of reasonable commercial standards of fair 

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dealing . . . .” (quoting Tex. Bus. & Com. Code § 2.305 cmt. 3)); Black’s Law 

Dictionary (9th ed. 2009) (explaining that the phrase “good faith” excludes 

conduct that contravenes “community standards of decency, fairness or 

reasonableness” (emphasis added)). Like the jury instruction in Morris, 20 

F.3d at 1118, the district court’s instruction here did not clarify that the 

Montgomerys’ good-faith belief need not be objectively reasonable.

Indeed, for this reason, the cases cited by the government are factually 

distinct. In both Pomponio, 429 U.S. at 12, and Simkanin, 420 F.3d at 410, 

the issue was whether the district court should have instructed the jury on 

the good-faith defense in order to adequately explain the definition of 

willfulness, not the content of the good-faith defense itself, which is at issue 

here. When good faith is mentioned in a Cheek jury instruction, our sister 

circuits routinely explain that a defendant’s good-faith belief need not be 

objectively reasonable. See, e.g., United States v. Mostler, 411 F. App’x 521, 

523 (3d Cir. 2011) (unpublished); United States v. Boyd, 378 F. App’x 841, 

849–50 (10th Cir. 2010) (unpublished); United States v. Dean, 487 F.3d 840, 

850 (11th Cir. 2007); United States v. Hilgeford, 7 F.3d 1340, 1343 (7th Cir. 

1993); see also Seventh Circuit Pattern Criminal Jury Instructions § 6:11; 

Pattern Criminal Jury Instructions for the District Courts of the First Circuit 

§ 4.25; Third Circuit Model Criminal Jury Instructions § 6.26.7401-4 cmt.; 

Manual of Model Criminal Jury Instructions for the District Courts of the 

Ninth Circuit § 9.42. But see Morris, 20 F.3d at 1118.

Nevertheless, the erroneous jury instruction in this case was harmless 

because the evidence showing that the Montgomerys intentionally 

underreported their income was “so overwhelming that the error could not 

have contributed to the jury’s decision to convict.” See Healy v. Maggio, 706 

F.2d 698, 701 (5th Cir. 1983). Over the course of three years, the 

Montgomerys underreported over $2.1 million of gross receipts from their 

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business. Although they asserted at trial that they did not willfully do so, 

they repeatedly reported less income—never more income—to the IRS than 

they reported to other entities. Indeed, the Montgomerys did so using the 

same tax forms, only with different numbers.

Moreover, the Montgomerys’ accountant, Carrington, advised them

that they were required by law to report all of the income and expenses from 

Montgomery’s Contracting. Then, after Carrington told the Montgomerys she 

could no longer prepare their tax returns because they did not provide her

with sufficient information, they continued to apply her name their tax 

returns without her authorization. They frequently transferred funds among 

their numerous bank accounts, making it difficult to track their expenses,

and they gave inconsistent answers to Agent Brown when questioned about 

their business’s income and expenses.

Finally, the Montgomerys have not shown that the district court’s jury 

instruction prevented them in any way from presenting the full breadth of 

their good-faith defense to the jury. In fact, the Montgomerys’ good-faith 

defense was central to defense counsel’s closing argument.5 Thus, 

considering the entire record, we are convinced that the erroneous jury 

instruction had no bearing on the jury’s decision. See Demmitt, 706 F.3d at 

675.

B.

We now turn to the Montgomerys’ contention that the district court 

erred by adopting the PSR, which contained a purportedly incorrect 

calculation of the tax loss attributable to their actions, and that as a result 

5 In closing argument, defense counsel argued that the prosecution had the burden 

to prove that Mr. Montgomery did not act in good faith; that he relied on advice given to 

him that the money he gave to the church was not taxable; that Mrs. Montgomery was 

unsophisticated with regard to preparing tax returns; and that she did not intent to cheat 

the government. 

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they received higher sentences under the Sentencing Guidelines. We review

a district court’s interpretation or application of the Sentencing Guidelines de 

novo and its factual findings for clear error. See United States v. Cisneros–

Gutierrez, 517 F.3d 751, 764 (5th Cir. 2008); see also United States v. Phelps, 

478 F.3d 680, 681 (5th Cir. 2007). “There is no clear error if the district 

court’s [factual] finding is plausible in light of the record as a whole.” 

Cisneros–Gutierrez, 517 F.3d at 764 (internal quotation marks omitted).

The Sentencing Guidelines provide that where, as here, a defendant’s 

offense involves the filing of a fraudulent or false tax return, “the tax loss is 

the total amount of loss that was the object of the offense (i.e., the loss that 

would have resulted had the offense been successfully completed).” U.S.S.G. 

§ 2T1.1(c). “If the offense involved filing a tax return in which gross income 

was underreported, the tax loss shall be treated as equal to 28% of the 

unreported gross income . . . unless a more accurate determination of the tax 

loss can be made.” U.S.S.G. § 2T1.1(c) cmt. n.(A).

IRS Agent Brown testified at trial that the PSR reflected the correct 

tax loss amount, $599,755. To arrive at that figure, Agent Brown multiplied 

the underreported gross receipts from Montgomery’s Contracting for each 

year by a tax rate of 28%. Agent Brown did not offset the underreported 

gross receipts by any additional expenses, such as Montgomery’s 

Contracting’s cost of construction materials and labor, that were not already 

disclosed in the Montgomerys’ tax returns.6 He did not do so for three 

reasons: (1) the Montgomerys failed to provide him with their books and 

6 In the Schedule C accompanying each of the Montgomerys’ federal income tax 

returns, the Montgomerys reported business expenses of $371,064 in 2003, $134,677 in 

2004, and $28,466 in 2005. Agent Brown did not challenge these figures, despite the 

Montgomerys’ failure to provide him with their books and records.

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records despite multiple requests;7 (2) the Montgomerys commingled and 

transferred funds among their various bank accounts; and (3) the 

Montgomerys had maintained in their interviews with him that they had 

reported all of their expenses in their federal income tax returns. 

As they did before the district court, the Montgomerys argue on appeal 

that the district court could have calculated a more accurate tax loss amount. 

See U.S.S.G. § 2T1.1(c) cmt. n.(A). They reason that the tax loss reflected in 

the PSR bore no resemblance to the actual tax loss because it did not take

into account the business expenses—the cost of the bricks, mortar, labor, 

etc.—associated with Montgomery’s Contracting’s underreported gross 

receipts. 

To substantiate their argument, the Montgomerys rely exclusively on 

the Jones Report. The Jones Report estimated the costs and expenses that 

Montgomery’s Contracting, or any other construction company, would incur 

in order to generate the gross receipts that the Montgomerys did not report 

as income. It relied on Jones’s industry experience and statistics obtained 

from BizStats, an online provider of business statistics. Applying these 

figures, the Jones Report estimated that Montgomery’s Contracting’s income, 

after accounting for all of its expenses, should approximate 19.29% of gross 

receipts. As a result, the Jones Report concluded that the actual tax loss due 

to the Montgomerys’ failure to report income was either $137,990 or 

$68,995.8 

7 Agent Brown testified that the Montgomerys told him that their books and records 

had been destroyed during a hurricane. Defense counsel for Mr. Montgomery

acknowledged to the district court at sentencing that he did not have the Montgomerys’ 

books and records either. 

8 The $137,990 figure factored in solely Montgomery’s Contracting’s cost of goods 

sold. The $68,995 figure factored in both the cost of goods sold and the Montgomerys’ 

purportedly deductible charitable contributions. At sentencing, Mr. Montgomery’s counsel 

conceded that accounting for the contributions was “problematic” and therefore focused the 

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The Montgomerys’ tax loss argument is unavailing. Although the 

Second and Tenth Circuits permit a sentencing court to consider, when 

calculating tax loss, unclaimed deductions that a defendant could have 

legitimately claimed, we—and several other circuits—do not.9 In Phelps, we 

held that the defendant was not entitled to reduce his tax loss by taking a tax 

credit that he did not claim on his fraudulent tax return. 478 F.3d at 682. 

We reasoned that “tax loss” is the loss the defendant intends when he files 

the fraudulent tax return, not the government’s actual loss. Id. “[R]eference 

to other unrelated mistakes on the return such as unclaimed deductions tells 

us nothing about the amount of loss to the government that his scheme 

intended to create.” Id. (quoting Chavin, 316 F.3d at 678) (internal quotation 

marks omitted). Thus, under Phelps, the Montgomerys may not rely on their 

asserted, yet unclaimed, business expenses from Montgomery’s Contracting 

to reduce the appropriate tax loss in this case.

In seeking to rebut Phelps, the Montgomerys cite the Tenth Circuit’s 

district court’s attention on the $137,990 figure. Because the Montgomerys failed to brief

whether the district court should have accounted for any deductible charitable 

contributions that the Montgomerys could have claimed, they have waived this issue. See 

Rodriguez v. ConAgra Grocery Prods. Co., 436 F.3d 468, 474 n.21 (5th Cir. 2006) (holding 

that party waived argument by failing to brief it on appeal).

9 Compare United States v. Hoskins, 654 F.3d 1086, 1094 (10th Cir. 2011); United 

States v. Gordon, 291 F.3d 181, 187 (2d Cir. 2002) with United States v. Yip, 592 F.3d 1035, 

1041 (9th Cir. 2010); United States v. Clarke, 562 F.3d 1158, 1164–65 (11th Cir. 2009); 

United States v. Delfino, 510 F.3d 468, 473 (4th Cir. 2007); United States v. Chavin, 316 

F.3d 666, 678 (7th Cir. 2002). Sentencing Guideline Amendment 774, which was not 

effective until after the Montgomerys’ sentencing, resolves this circuit split. It explains 

that a sentencing court may consider unclaimed deductions to arrive at a reasonable 

estimate of tax loss. Counsel for the Montgomerys conceded at oral argument that 

Amendment 774 is a substantive, rather than clarifying, amendment and is therefore not 

retroactively applicable to the Montgomerys. See United States v. Solis, 675 F.3d 795, 797–

98 (5th Cir. 2012) (“A statement that an amendment addresses a circuit conflict indicates 

that it is substantive.”). In any event, Amendment 774 still requires the deduction to be 

“reasonably and practicably ascertainable” and supported by sufficient information to 

determine its reliability. The Montgomerys have not met that burden here, as explained 

below.

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decision in Hoskins, 654 F.3d 1086. Putting aside the fact that it conflicts 

with Phelps, our binding precedent, the court in Hoskins merely held that 

“the plain language of § 2T1.1 does not categorically prevent a court from 

considering unclaimed deductions in its sentencing analysis.” Id. at 1094 

(emphasis added). Where the defendant “offers weak support for a tax-loss 

estimate,” the sentencing court is not required speculate as to what 

deductions the defendant may have claimed. See id. Likewise here, the 

Montgomerys offer little and unreliable support for their proposed tax-loss 

estimate, as we explain next.

Even assuming arguendo that Phelps does not categorically prevent us 

from considering the Montgomerys’ unclaimed business expenses, the district 

court “had many reasons to be skeptical of [the] proposed deductions.” See id.

at 1097. To begin with, the Montgomerys repeatedly told Agent Brown that 

they had reported all of their business expenses, in direct conflict with what 

they now assert. Moreover, the figures contained in the Jones Report did not 

rely on the Montgomerys’ business records,10 and Jones did not review these 

figures with the Montgomerys to ensure their accuracy. See United States v. 

Kellar, 394 F. App’x 158, 169–70 (5th Cir. 2010) (unpublished but persuasive) 

(affirming the district court’s decision to disallow the defendants’ tax loss 

calculation because, among other reasons, their “accountant never reviewed 

his tax computations with the [the defendants] themselves to ensure their 

accuracy.”). Rather, the Jones Report relied on statistics obtained from 

BizStats, which disclaims any representation as to the accuracy of its 

statistics. Of course, as the Montgomerys argue, most businesses do not 

obtain their materials and labor for free. But the Jones Report failed to 

10 Indeed, at sentencing the district court explained that “[b]ecause the 

Montgomerys . . . did not keep accurate records, did not make accurate returns . . . it is 

impossible to know with any precision” their income or potential deductions or expenses. 

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account for the fact that certain subcontractors for Montgomery’s Contracting 

were not paid for the work they performed, which Mr. Montgomery’s counsel

conceded at sentencing. 

In sum, the Jones Report figures were of doubtful reliability and the 

district court did not err in declining to accept the Montgomerys’ calculation 

as “a more accurate determination of the tax loss.” See U.S.S.G. § 2T1.1(c) 

cmt. n.(A). 

For the foregoing reasons, we AFFIRM.

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HAYNES, Circuit Judge, concurring in the judgment:

Undoubtedly, the better part of valor for a district court faced with 

proposed jury instructions that are not inaccurate and that are requested by 

both sides is to give those instructions. But the failure to do so is not 

automatically an abuse of discretion. The district court was entitled to 

“broad discretion in framing the instructions to the jury,” United States v. 

McKinney, 53 F.3d 664, 676 (5th Cir. 1995), and we are not supposed to 

conclude that the district court has abused that discretion unless the 

instructions, as a whole, create “substantial and ineradicable doubt whether 

the jury has been properly guided in its deliberations,” United States v. 

Demmitt, 706 F.3d 665, 675 (5th Cir. 2013). Because I conclude this high 

hurdle has not been jumped by the Montgomerys, I cannot join in the entirety 

of the majority opinion.

The majority opinion concludes that the district court erred because it 

did not advise the jury that a defendant’s good-faith misunderstanding of tax 

law may be objectively unreasonable. See Cheek v. United States, 498 U.S. 

192, 202 (1991). Cheek, however, did not mandate any particular language 

for conveying the general concept of good faith to the jury, and the district 

court did so convey that here, instructing the jury that it must acquit a 

defendant who believed in good faith that he was acting lawfully. The 

instructions stated: “If you find that a defendant acted in good faith, you 

must acquit that defendant because his good faith is inconsistent with his 

having the intent to defraud or to violate the law.” The instructions therefore 

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generally address any good-faith belief, even an unreasonable one, held by a 

defendant and, taken as a whole, do not misstate the issues or the law. See 

McKinney, 53 F.3d at 676.

Moreover, we have previously held that a district court is not even 

required to include a specific instruction on good faith, where, as here, “it 

adequately instructed the jury on the meaning of willfulness.” United States 

v. Simkanin, 420 F.3d 397, 411 (5th Cir. 2005); see also United States v. 

Pomponio, 429 U.S. 10, 13 (1976). Under Simkanin, the district court could 

therefore have declined to instruct the jury on a defendant’s good-faith belief 

altogether and that decision would have been within its discretion. 420 F.3d 

at 411. I fail then to see how the district court’s decision to instruct the jury 

on a defendant’s good-faith belief generally, but not expressly address the 

“unreasonable” good-faith belief, could constitute an abuse of discretion.

Relying in part on United States v. Morris, 20 F.3d 1111, 1118 (11th 

Cir. 1994), the majority opinion concludes that the district court’s jury 

instructions “risked implying that the Montgomerys could not be acquitted on 

the basis of good faith unless their views were objectively reasonable.” 

However, Morris simply addressed the same circumstances as those 

presented in Simkanin, where a district court instructed a jury on willfulness 

but not on good faith. Id. at 1117. Although the Eleventh Circuit in Morris

held that the district court’s instructions were inadequate because they did 

not “make clear that a good-faith belief . . . negates the specific intent 

element of the crime,” id. at 1118, we are bound by our holding in Simkanin, 

420 F.3d at 411. 

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Moreover, the Eleventh Circuit in Morris acknowledged that “there is 

no requirement in this circuit that jury instructions specifically note that a 

good-faith defense need not be objectively reasonable.” 20 F.3d at 1118. Yet, 

that is precisely what the majority opinion concludes is required here. The 

majority opinion’s speculation on what the jury might have thought “good 

faith” means has no anchor in any relevant case law or the record here.1 

Whatever the “risks,” our task is to determine whether the district court’s 

jury instructions, taken as a whole, incorrectly reflected the issues and the 

law. See McKinney, 53 F.3d at 676. They did not. Given that our review is 

for abuse of discretion, I cannot conclude that the district court’s jury 

instructions constituted such an abuse. See United States v. Roussel, 705 

F.3d 184, 190 (5th Cir. 2013).2

1 The cases cited by the majority opinion for the proposition that “good faith is 

equated with reasonableness” are neither tax cases nor jury instruction cases. They also do 

not support the conclusion that this jury might be confused about what “good faith” 

encompasses here. It is unlikely that a jury is regularly perusing Black’s Law Dictionary or 

cases analyzing unrelated federal and Texas statutes, the only references cited by the 

majority opinion for this point.

2 I agree with the majority opinion that if there is any error, it is harmless 

considering the evidence in this case.

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