Boulware v. United States
United States Supreme Court
552 U.S. 421 (2008)
- Written by Eric Miller, JD
Facts
Michael Boulware (defendant) was the founder, president, and controlling shareholder of Hawaiian Isles Enterprises (HIE), a closely held corporation. Boulware was accused by the United States government (plaintiff) of diverting millions of dollars from HIE to support his extravagant lifestyle. In his federal trial for criminal tax evasion, Boulware argued that HIE had no earnings or profits and that the amounts allegedly diverted were in fact nontaxable returns of capital up to his basis in the company’s stock. The government moved to bar evidence in support of Boulware’s theory. The court granted the motion and found Boulware guilty, relying on an earlier holding that a diversion of funds to a shareholder may only be deemed a return of capital if the defendant provides evidence that a return of capital was the corporation’s intent. Boulware appealed. The appellate court affirmed. Boulware again appealed. The United States Supreme Court granted certiorari.
Rule of Law
Issue
Holding and Reasoning (Souter, J.)
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