U.S. v. Kouba, No. 86-5174

CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)
Writing for the CourtBefore WOLLMAN, Circuit Judge, BRIGHT, Senior Circuit Judge, and MAGILL; WOLLMAN
Citation822 F.2d 768
Parties-5405, 87-2 USTC P 9396 UNITED STATES of America, Appellee, v. Albert W. KOUBA, a/k/a Rusty Kouba, Appellant.
Docket NumberNo. 86-5174
Decision Date29 June 1987

Page 768

822 F.2d 768
60 A.F.T.R.2d 87-5405, 87-2 USTC P 9396
UNITED STATES of America, Appellee,
v.
Albert W. KOUBA, a/k/a Rusty Kouba, Appellant.
No. 86-5174.
United States Court of Appeals,
Eighth Circuit.
Submitted March 16, 1987.
Decided June 29, 1987.

Page 769

William A. Cohan of Denver, Colo., for appellant.

Lynn E. Crooks, Asst. U.S. Atty., Fargo, N.D., for appellee.

Before WOLLMAN, Circuit Judge, BRIGHT, Senior Circuit Judge, and MAGILL, Circuit Judge.

WOLLMAN, Circuit Judge.

Albert (Rusty) Kouba appeals his conviction for aiding others in the preparation of false income tax returns, 26 U.S.C. Sec. 7206(2), 1 and for failing to file his own

Page 770

income tax returns, 26 U.S.C. Sec. 7203. 2 We affirm.

Following a two-year grand jury investigation that involved the participation of three grand jury panels, Kouba was indicted on nine counts of aiding others in the preparation of false income tax returns, two counts of failing to file his own income tax returns, and one count of suborning perjury. 3

Kouba admitted at trial that he had assisted in filing the tax returns at issue and that he had failed to file his own income tax returns for the years 1981 and 1982. He defended on the basis of a good faith misunderstanding of the requirements of the law. He claimed that he attempted to implement a tax shelter program for his clients based on a program developed by the American Law Association (ALA). See United States v. Russell, 804 F.2d 571 (9th Cir.1986); Zmuda v. C.I.R., 731 F.2d 1417 (9th Cir.1984); United States v. Dahlstrom, 713 F.2d 1423 (9th Cir.1983), cert. denied, 466 U.S. 980, 104 S.Ct. 2363, 80 L.Ed.2d 835 (1984). At the heart of this program were three foreign trusts to be established individually by each taxpayer. Property or income was transferred to and among these trusts and eventually transferred back to the taxpayer as a "gift." Some of the transactions, including the "gift" to the taxpayer, were allegedly tax-free in part because of the foreign status of the trusts. In addition to endeavoring to implement the ALA program for his clients, Kouba had his clients take large deductions for alleged expenses the "trusts" incurred. These deductions appeared on his clients' returns, however, as expenses from their existing ventures.

Kouba's defense at trial centered on the proposition that since the ALA program had not been determined to be illegal, he could not be convicted of assisting others in the preparation of false or fraudulent income tax returns. Further, monies which the government contended were includable in his income were in fact "gifts" from the foreign trusts and as such not includable under the Internal Revenue Code (IRC).

At trial, however, the government avoided the issue of the legality of the tax shelter program, basing its case on the deductions Kouba had claimed for his clients and his failure to file his tax returns. The government asserted that the main issues were whether Kouba in good faith believed that the deductions on his clients' returns were valid at the time he made them and whether he in good faith believed that he was not required to file income tax returns for the years 1981 and 1982.

The jury convicted Kouba on all counts save the count of suborning perjury. The district court 4 thereafter sentenced him to eighteen months in prison, followed by three years of probation.

Kouba first contends that the district court erred in instructing the jury both before deliberations began and again when the jury submitted questions during deliberations. We do not agree.

On appeal, we evaluate the adequacy of instructions by reviewing them as a whole. United States v. McQuarry, 726 F.2d 401 (8th Cir.1984) (per curiam). A district court has wide discretion in formulating appropriate jury instructions. United

Page 771

States v. Reda, 765 F.2d 715, 719 (8th Cir.1985). A defendant is not entitled to a particularly worded instruction where the instructions given adequately and correctly cover the substance of the requested instruction. United States v. Reda, 765 F.2d at 719; United States v. Lisko, 747 F.2d 1234, 1238 (8th Cir.1984). Nor is the defendant entitled to an instruction when the evidence does not support it. United States v. Walker, 817 F.2d 461 (8th Cir.1987).

Kouba objects specifically to the district court's refusal to give an instruction concerning 26 U.S.C. Sec. 2501. He argues that the statute supports his position that the money he received from foreign trusts was not includable in gross income. Section 2501, however, concerns the gift tax; it provides that a transfer of intangible property by a nonresident is not subject to a gift tax. Internal Revenue Code section 102(a), covered by Instruction 26A, provides that gross income does not include the value of property acquired by gift. If the money Kouba received from foreign trusts was a gift, it was not includable in Kouba's gross income under section 102(a), regardless of whether it was exempt from gift tax under section 2501. Therefore, had the jury accepted Kouba's theory that money he received from foreign trusts was a gift, the instruction would have directed the jury to conclude that the money was not includable in his gross income and thus that he was not a person required to file income tax returns. Accordingly, we do not find that the district court abused its discretion in failing to give Kouba's proposed additional instruction.

Kouba also objects to the district court's failure to give a jury instruction generally setting out his theory of the case. 5 Reduced to its essence, Kouba's theory of the case was that he had a good faith misunderstanding of the law, both as to the charges of assisting in the preparation of false income tax returns and to the charges of failing to file his own income tax return.

The district court instructed the jury that in order to convict Kouba of the crimes charged, the government had to establish beyond a reasonable doubt that he willfully committed the acts prohibited by the statutes in question. In defining willfulness, the court instructed the jury that:

Defendant's conduct is not willful if he acted through negligence, inadvertence, or mistake, or due to good faith misunderstanding of the requirements of the law. It should be pointed out, however, that disagreement with the law is not a defense. It is the duty of all citizens to obey the law whether they agree with it or not.

The district court also instructed the jury that:

If a person in good faith believes that an income tax return, as prepared by him or her, truthfully reports the taxable income and allowable deductions of the taxpayer under the internal revenue laws, that person cannot be guilty of willfully preparing or presenting, or causing to be prepared or presented, a false or fraudulent return.

While good faith has no precise meaning, it encompasses, among other things, an honest intention, an absence of malice and an honest intention to abstain from taking any unconscientious advantage of another.

We find that these instructions adequately covered the substance of Kouba's defense theory and gave defense counsel the opportunity to make a fair and adequate argument on the theory that Kouba had a good faith misunderstanding of the law. See United States v. Walker, 817 F.2d 461 (8th Cir.1987); United States v. McQuarry, 726 F.2d at 402; United States

Page 772

v. Reda, 765 F.2d at 719. These...

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  • U.S. v. Wilson, No. 08-2579.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (8th Circuit)
    • May 14, 2009
    ...for an indictment due to grand jury abuse is appropriate only upon a showing of actual prejudice to the accused." United States v. Kouba, 822 F.2d 768, 774 (8th Wilson claims that the Victim told the grand jury that he kidnapped her from Oklahoma, whereas she now acknowledges that she left ......
  • US v. Lopez, No. CR-89-0687-MHP.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • May 24, 1991
    ...because of government misconduct. Prejudice required: United States v. Owen, 580 F.2d 365, 367-68 (9th Cir.1978); United States v. Kouba, 822 F.2d 768, 774 (8th Cir.1987); United States v. McKenzie, 678 F.2d 629, 631 (5th Cir.), cert. denied, 459 U.S. 1038, 103 S.Ct. 450, 74 L.Ed.2d 604 (19......
  • U.S. v. Hooks, No. 87-1007
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • June 8, 1988
    ...713 F.2d 1423, 1426-27 (9th Cir.1983), cert. denied, 466 U.S. 980, 104 S.Ct. 2363, 80 L.Ed.2d 835 (1984). See also United States v. Kouba, 822 F.2d 768, 773 (8th Cir.1987); United States v. Crooks, 804 F.2d 1441, 1448 (9th Cir.1986); United States v. Perez, 565 F.2d 1227, 1233-34 (2nd Cir.1......
  • U.S. v. Spillone, Nos. 86-5037
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • March 7, 1989
    ...situation, the Eighth Circuit held that such an impropriety was made harmless by the defendant's conviction. See United States v. Kouba, 822 F.2d 768, 773-74 (8th Cir.1987); see also United States v. Hintzman, 806 F.2d 840, 843 (8th Cir.1986) (holding that any error by prosecutor and govern......
  • Request a trial to view additional results
44 cases
  • U.S. v. Wilson, No. 08-2579.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (8th Circuit)
    • May 14, 2009
    ...for an indictment due to grand jury abuse is appropriate only upon a showing of actual prejudice to the accused." United States v. Kouba, 822 F.2d 768, 774 (8th Wilson claims that the Victim told the grand jury that he kidnapped her from Oklahoma, whereas she now acknowledges that she left ......
  • US v. Lopez, No. CR-89-0687-MHP.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • May 24, 1991
    ...because of government misconduct. Prejudice required: United States v. Owen, 580 F.2d 365, 367-68 (9th Cir.1978); United States v. Kouba, 822 F.2d 768, 774 (8th Cir.1987); United States v. McKenzie, 678 F.2d 629, 631 (5th Cir.), cert. denied, 459 U.S. 1038, 103 S.Ct. 450, 74 L.Ed.2d 604 (19......
  • U.S. v. Spillone, Nos. 86-5037
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • March 7, 1989
    ...situation, the Eighth Circuit held that such an impropriety was made harmless by the defendant's conviction. See United States v. Kouba, 822 F.2d 768, 773-74 (8th Cir.1987); see also United States v. Hintzman, 806 F.2d 840, 843 (8th Cir.1986) (holding that any error by prosecutor and govern......
  • U.S. v. Hooks, No. 87-1007
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • June 8, 1988
    ...713 F.2d 1423, 1426-27 (9th Cir.1983), cert. denied, 466 U.S. 980, 104 S.Ct. 2363, 80 L.Ed.2d 835 (1984). See also United States v. Kouba, 822 F.2d 768, 773 (8th Cir.1987); United States v. Crooks, 804 F.2d 1441, 1448 (9th Cir.1986); United States v. Perez, 565 F.2d 1227, 1233-34 (2nd Cir.1......
  • Request a trial to view additional results

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