United States Supreme Court Cases & Opinions

U.S. Supreme Court

United States v. Ragen, 314 U.S. 513 (1942)

United States v. Ragen

No. 54

Argued December 11, 1941

Decided January 5, 1942*

314 U.S. 513

Syllabus

1. The crime of willfully attempting to evade or defeat income taxes (Rev. Acts 1932, 1934, 1936, § 145), is committed where the members of a corporation, scheming to reduce or evade it income taxes, cause

Page 314 U. S. 514

distributions of it funds to be made to it shareholders in the guise of commissions, and cause the amounts so distributed to be deducted in the corporation's income tax reports from its gross income as reasonable allowances for personal services, knowing that the amounts are in excess of reasonable compensation for any services rendered by the recipients to the corporation. P. 314 U. S. 522.

2. The mere fact that a penal statute is so framed as to require a jury upon occasion to determine a question of reasonableness does not make it too vague to afford a practical guide to permissible conduct. United States v. Cohen Grocery Co., 255 U. S. 81, and other cases, distinguished. P. 314 U. S. 523.

3. There was sufficient evidence in this case to support a finding by the jury that the respondents willfully attempted to make unreasonable allowances for personal services in reporting the net income of the corporation. P. 314 U. S. 524.

4. Where a count of the indictment alleged that money of a corporation, distributed to its shareholders as "commissions" and deducted in its income tax returns as reasonable expenses for services to the corporation, were dividends in their entirety, but the proof indicated that some services to the corporation were performed by the recipients, the variance was not fatal, since it related, at most, to the extent of the alleged tax evasion, and involved no element of surprise prejudicial to the defense. P. 314 U. S. 526.

118 F.2d 128 reversed.

Certiorari, 313 U.S. 557, to review the reversal of judgments upon convictions for conspiracy to violate, and for violations of, a provision in several Revenue Acts making criminal a willful attempt to evade or defeat any tax.

Page 314 U. S. 516