California Criminal Jury Instructions (CALCRIM) (2017)

2842. Determining Income: Net Worth Method

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2842.Determining Income: Net Worth Method
In this case, the People are using what is called the net worth method to
try to prove that the defendant had unreported taxable income. I will
now explain the net worth method.
On any given date, a person’s net worth is the value of everything that
person owns minus the value of all that person’s debts and financial
obligations. It is the difference between what a person owns and what
that person owes. The value of any item that a person owns is measured
by what it was worth when it was acquired, not its current market
value.
If the People prove that the defendant’s net worth increased during
<insert year alleged>, then you may but are not required
to conclude that the defendant received money or property during that
year.
In order to prove that the money or property received was taxable
income, the People must also prove that: (1) the defendant had one or
more sources of taxable income, and (2) the money or property the
defendant received during the year did not come from nontaxable
sources. Nontaxable sources of income include gifts, inheritances, loans,
or redeposits or transfers of funds between bank accounts.
If the People have proved that: (a) the defendant’s net worth increased
during <insert year alleged>, (b) the defendant had one or
more sources of taxable income, and (c) the money or property the
defendant received during that year did not come from nontaxable
sources, then you may but are not required to conclude that the money
or property received was taxable income to the defendant. If you have a
reasonable doubt about whether the People have proved (a), (b), or (c),
you must find that the People have not proved under the net worth
method that the defendant had unreported taxable income.
In order to prove that the defendant had unreported taxable income
[using the net worth method], the People must also prove that the
defendant’s net worth increased by an amount that was substantially
greater than the income that the defendant reported on (his/her) tax
return for <insert year alleged>.
[There is another factor you may consider in deciding whether the
People have proved that the defendant had unreported taxable income
under the net worth method. If the People have proved beyond a
reasonable doubt that: (1) during the year, the defendant spent money
in ways that did not change (his/her) net worth at the end of the year
and (2) those expenditures would not be valid tax deductions, then you
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may but are not required to conclude that the defendant received
money or property during the year. If the People also prove beyond a
reasonable doubt that the money or property received did not come
from nontaxable sources, then you may but are not required to conclude
that the money or property was also taxable income. If you have a
reasonable doubt about whether the People have proved any of these
factors, you may not take the expenditures into account in applying the
net worth method.]
In order to rely on the net worth method of proving income, the People
must prove the defendant’s net worth at the starting point with
reasonable certainty. Here the starting point is January 1,
<insert year alleged>. The People are not required to prove the exact
value of each and every asset the defendant owned at the starting point.
However, the People must prove beyond a reasonable doubt that all the
assets the defendant owned at the starting point were not enough to
account for any proven increase in (his/her) net worth during the year.
In deciding whether the defendant’s net worth at the starting point has
been proved with reasonable certainty and whether the People have
proved that any money or property the defendant received during the
year did not come from nontaxable sources, consider whether law
enforcement agents sufficiently investigated all reasonable “leads”
concerning the existence and value of other assets and sources of
nontaxable income. Law enforcement agents must investigate all
reasonable leads that arise during the investigation or that the
defendant suggests regarding assets and income. This duty to reasonably
investigate applies only to leads that arise during the investigation or to
explanations the defendant gives during the investigation. Law
enforcement agents are not required to investigate every conceivable
asset or source of nontaxable funds.
If you have a reasonable doubt about any of the following:
A. Whether the investigation reasonably pursued or refuted the
defendant’s explanations or other leads regarding defendant’s
assets or income during the year,
B. Whether the People have proved the defendant’s net worth at
the beginning of <insert year alleged> to a
reasonable degree of certainty,
OR
C. Whether the People have proved that any increase in the
defendant’s net worth[, together with any nondeductible
expenditures the defendant made during the year,] was
substantially more than the income that the defendant reported
on (his/her) tax return for <insert year alleged>,
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then you must find that the People have not proved under the net worth
method that the defendant had unreported taxable income.
[If, on the other hand, you conclude that the defendant did have
unreported taxable income, you must still decide whether the People
have proved all elements of the crime[s] charged [in Count[s] ].]
New January 2006
BENCH NOTES
Instructional Duty
If the prosecution is relying on the net worth method, the court has a sua sponte
duty to give this instruction. (Holland v. United States (1954) 348 U.S. 121, 129
[75 S.Ct. 127, 99 L.Ed. 150]; United States v. Hall (9th Cir. 1981) 650 F.2d 994,
998.)
The court must also give the appropriate instruction on the elements of the offense
charged.
Give the bracketed sentence that begins with “If, on the other hand, you conclude”
in every case, unless the court is giving CALCRIM No. 2846, Proof of Unreported
Taxable Income: Must Still Prove Elements of Offense.
AUTHORITY
• Net Worth Method Explained. Holland v. United States (1954) 348 U.S. 121,
129 [75 S.Ct. 127, 99 L.Ed. 150]; see also Pattern Jury Instructions of the
District Judges Association of the Eleventh Circuit, Offense Instruction No. 93.2
(2003); Federal Jury Practice and Instructions, Criminal (5th ed.) § 67.05.
• Sua Sponte Duty to Instruct on Method. Holland v. United States (1954) 348
U.S. 121, 129 [75 S.Ct. 127, 99 L.Ed. 150]; United States v. Hall (9th Cir.
1981) 650 F.2d 994, 998.
• Requirements for Proof. Holland v. United States (1954) 348 U.S. 121,
129–138 [75 S.Ct. 127, 99 L.Ed. 150]; see also United States v. Sabino (6th Cir.
2001) 274 F.3d 1053, 1071.
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