It’s one thing to know the Supreme Court’s “formula” for how the government proves a net worth case. It’s quite another to see how a net worth investigation/prosecution actually works.
The elements of attempted tax evasion under 57201 are (1) an additional tax due and owing, (2) an attempt to evade or defeat that tax, and (3) willfulness. * * * The Government makes out a prima facie case under the net worth method of proof if it establishes the defendant’s opening net worth. . .with reasonable certainty and then shows increases in his net worth for each year in question which, added to his nondeductible expenditures and excluding his known nontaxable receipts for the year, exceed his reported taxable income by a substantial amount. * * * The jury may infer that the defendant’s excess net worth increases represent unreported taxable income if the Government either shows a likely taxable source * * or negates all possible nontaxable sources. ... the jury may further infer willfulness from the fact of underreporting coupled with evidence of conduct by the defendant tending to mislead or conceal...
