United States vs. Dane Watson: A Teaching Case

Abstract

This teaching case can be used in various classes: accounting, tax, business law, or ethics. It can be used at either the undergraduate level or the graduate level, perhaps with different learning objectives. It is derived from a real criminal court case where the defendants paid workers using gold and silver coins with a fair value above their face value. For tax purposes, the defendants were using the face value of the coins as the amount of compensation even though the coins were immediately traded for cash. Also, the workers were required to sign independent contractor agreements, so no income, Social Security, or Medicare taxes were withheld.