Keogh v. Commissioner

713 F.2d 496 (9th Cir. 1983)



Personal records kept for business reasons may be able to qualify as business records under Fed R. Evid. 803(6). The reliability usually found in records kept by business concerns may be established in personal business records if they are systematically checked and regularly and continually maintained.


The commissioner of the Internal Revenue Service assessed income tax deficiencies against a husband and wife, the Keoghs, based on husband's underreported tip income. On appeal, the Keoghs claimed that a coworker's personal diary was erroneously admitted into evidence to prove tip income. 


Could the coworker's personal diary be properly admitted into evidence to prove tip income?




The Court held that the diary was properly admitted as a "business record" exception to hearsay because even though it was personal, it was regularly and continually maintained by the author as part of his own "business activity." The court rejected the Keoghs’ claims that the diary was not trustworthy where its author had a criminal record and a reputation for dishonesty and that they were not able to cross-examine him due to his failure to respond to a subpoena to appear at the trial. The Court found that the tax court considered the author's reputation and the lack of cross-examination in weighing the value of the diary. The Court also held that the tax court 's calculation of appellants' unreported tip income based on the diary was not clearly erroneous and that the tax court was free to disbelieve appellants' evidence to the contrary.

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