Elton Silkman’s story may be shortly explained.
He was a South Dakota farmer who kept his farming expenses in a
shoe box, organized by year. He may very well have had losses for
the years 1980 through 1985, and consequently did not file federal
income tax returns. However, using Bureau of Labor Statistics, the
IRS claimed that he owed income taxes for these years and sent him
a notice of deficiency. Silkman failed to challenge these alleged
deficiencies in Tax Court and the IRS assessed taxes against him
for these years.
Shortly before the IRS made attempts to collect these assessed
taxes, Elton decided to get out of the farming business. After
meeting a trust salesman, he formed several trusts and transferred
his farming assets to them. He then sold all of his land, farming
equipment and cattle, and the proceeds were deposited into bank
accounts of the trusts. All of this was done just prior to the IRS
attempting collection, and the IRS only secured about 5,000 bux
from levies. Thereafter, the funds held by the trusts were
transferred by the trustee to bank accounts in Europe, from which
they were mysteriously “lost.” I never believed the “lost” story,
but Elton did to the very end. Such is the effect of deception.
Elton was indicted for tax evasion because he allegedly
transferred his assets to defeat payment of the taxes assessed
against him. At trial, the prosecution contended that the tax
assessments against Elton were conclusive and could not be
challenged during trial. I, however, wanted to do exactly that:
show what the IRS claimed was the “income” for each year, and then
offer the expenses incurred for each year as a demonstration that
Elton really had losses, and that there really was no tax due and
owing for these years. Proof in this respect was offered from the
“shoe box.” However, the district court excluded this evidence and
Elton was convicted.
On appeal, the Court of Appeals for the 8th Circuit reversed
Elton’s convictions because of the exclusion of this evidence.
It took an appeal to solve some of Elton’s problems. But he still
lost his farm to a trust promoter.