Opinion ID: 399922
Heading Depth: 1
Heading Rank: 2

Heading: Introduction of Personal Income Tax Returns.

Text: 25 The indictment charged defendants with criminal violations in connection with the 1973 and 1974 corporate income tax returns of the Co-op. Jack White contends that the trial court improperly admitted his personal income tax returns for 1975 and 1976 because these returns were not responsive to the indictment. The court admitted White's personal income tax returns over White's objection, on the condition that the Government connect them up to the conspiracy charge. White argues on appeal that the Government failed to connect up White's returns to the conspiracy, and that their admission prejudiced White by injecting into the case the issue of proper tax treatment of the interest on the Act 9 bonds. 26 We note, first, that among the thirty-four overt acts alleged in furtherance of the conspiracy charged in count I of the indictment, two items related to Jack E. White's personal income tax returns for 1976 and 1977. 6 The personal income tax returns were relevant to the charge that White and Kuykendall acted in concert to defraud the IRS by concealing the true nature of White's self-dealing transactions on both the Co-op's books and on White's personal records. White did not report as income the $77,200 and $72,400 he received in 1975 and 1976 respectively as interest on the Act 9 bonds he held. The Government maintained that White should have reported the interest as income because the Co-op had arranged White's interest-free loan as a means of indirectly providing compensation to White. 27 Rule 401 of the Federal Rules of Evidence defines relevant evidence as evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence. White and Kuykendall sought to prove lack of willfulness to defraud the IRS by attempting to show the unsettled state of the tax law governing nonexempt cooperatives. More telling on the issue of intent to defraud, however, are the facts that reveal how White put Co-op funds to his own use, and how White and Kuykendall reflected these transactions on the books of the Co-op in an effort to portray them as tax-exempt. Because White's personal finances so intertwined with those of the Co-op, the entries on White's personal income tax returns became relevant on the issue of defendants' intent to impair or impede the IRS in the ascertainment and collection of taxes from the Co-op. The trial court did not abuse its discretion under Fed.R.Evid. 403 in admitting White's personal income tax returns as bearing on the issue of intent to conspire to defraud the United States. 28