Opinion ID: 538863
Heading Depth: 3
Heading Rank: 2

Heading: The Dispute on Instructions

Text: 12 Mr. Toushin moved to strike IRS Agent Czurylo's testimony as a misstatement of the law. The district court denied this motion. Noting that Mr. Toushin was the sole owner of the corporation, the district court stated that conversion of corporate funds did not take place when Mr. Toushin took cash from the premises of the Bijou. Instead, the diversion took place when Mr. Toushin made the determination to use the [corporate] cash for his own personal use. Tr. at 2431. To counter defense counsel's assertion that the money could be considered diverted at the moment Mr. Toushin took it from the theater, the court applied a presumption of innocence to infer that Mr. Toushin did not intend to skim the money when he first removed it: 13 I'm giving [Mr. Toushin] the benefit of the doubt, because he's presumed to be innocent. When he took that money from Entertainment & Amusement, he did not take it with the intent to convert it for his personal use, he took it for the purpose of--applying the presumption of innocence--he took it for the purpose of storing cash for Entertainment & Amusement. 14 Tr. at 2432. 15 Consequently, the district court rejected the instruction propounded by defense counsel regarding the timing issue. That proffered instruction was: 16 When corporate receipts of a controlled corporation are taken from the corporation by the controlling shareholder, not reported by the corporation, and come under the dominion and control of said shareholder thereby being available for his personal use, said receipts are reportable as income to the said shareholder in the year that the receipts are taken, no matter that said receipts are not actually spent for his personal use until later years. 17 R.150 at 7 (emphasis supplied). Instead, the district court, adopting the essential components of the government's suggested instruction, gave the following instruction to the jury: 18 Where corporate funds are diverted by a person who has a controlling interest in the corporation and are converted to the person's personal use, those diverted funds, when converted to personal use, are dividends to the person with the controlling interest, and the funds must be reported as income by that person on his individual income tax return for the year those dividends are received. 19 A diversion of corporate funds occurs at the time that a person who has a controlling interest in the corporation uses or directs that those corporate funds be used for his personal use. 20 Tr. 2579 (emphasis supplied). Furthermore, the government stressed during closing argument this view of when skimmed money is taxable. 5 II