Kenneth Poy Lee and Chow Joy Lee v. United States

GOLDBERG, Circuit Judge:

This is an appeal by the government from an adverse ruling on taxpayers’ suit to harvest a refund of taxes paid under protest. Using “net worth statements” to demonstrate an unexplained flowering of taxpayers’ wealth, the government sought to show that the luxuriating of financial seedlings into larger plants was attributable to the receipt of unreported monetary nutrients. 1 In order to avoid a statute of limitations barrier to tax liability, the government was required to prove fraud in the understatement of income. The trial judge was unpersuaded as to that…