source: Caselaw Access Project

author: JON O. NEWMAN, Chief Judge:

license: Public Domain

text:
    UNITED STATES of America, Appellee-Cross-Appellant, v. Francesco VERSAGLIO, Defendant-Appellant-Cross-Appellee.
    Nos. 509, 942, Dockets 95-1238, 95-1263.
    United States Court of Appeals, Second Circuit.
    Argued Dec. 7, 1995.
    Decided June 3, 1996.

      Alan Scribner, New York City (Larry Bronson, Bronson & Marx, on the brief), for defendant-appellant-eross-appellee.
    Andrew W. Weissmann, Asst. U.S. Atty., Brooklyn, N.Y. (Zachary W. Carter, U.S. Atty., David C. James, Asst. U.S. Atty., on the brief), for appellee-cross-appellant.
    Before: NEWMAN, Chief Judge, OAKES and CABRANES, Circuit Judges.
   JON O. NEWMAN, Chief Judge:

The principal issue on this appeal is whether the Sentencing Reform Act of 1984 (“SRA” or the “Act”) amends the criminal contempt statute, 18 U.S.C. § 401, to allow a court to sentence a defendant convicted of criminal contempt to both a fine and a term of imprisonment. This issue arises on an appeal by Francesco Versaglio from the judgment of the District Court for the Eastern District of New York (Edward R. Korman, Judge), entered April 28, 1995, imposing a sentence for criminal contempt that included a 21-month term of imprisonment and a $25,000 fine. Appellant contends that section 401’s prohibition on the imposition of both a fine and a term of imprisonment was not superseded by the provisions of the SRA that generally permit the imposition of fines in addition to any other punishment. See 18 U.S.C. §§ 3551, 3571. The Government cross-appeals, contending that the District Court should have determined the appropriate sentence by applying the guideline for obstruction of justice, rather than the guideline for misprision of a felony.

We conclude that Versaglio could not be sentenced to both a fine and imprisonment and that since he has paid the fine, his prison sentence must be vacated. On the cross-appeal, we agree with the Government that the obstruction guideline is relevant, and therefore remand to afford the District Court an opportunity to revise upward the amount of the fine.

Background

Versaglio is allegedly a member of the Gambino Organized Crime Family. He was granted immunity and ordered to testify in the trial of United States v. Conte, which involved charges of conspiracy to commit murder and conspiracy to distribute heroin. He refused to testify, and the ease ended in a mistrial. After initially being committed for civil contempt, Versaglio was charged with criminal contempt and pled guilty. Versaglio was sentenced on April 13, 1995, pursuant to the United States Sentencing Guidelines. The guideline for criminal contempt, U.S.S.G. § 2J1.1, directs a court to apply section 2X5.1, the guideline for “other offenses.”

Section 2X5.1 states that a court should apply “the most analogous offense guideline.” Id., § 2X5.1. The Government argued that the District Court should apply the obstruction of justice guideline, id., § 2J1.2, while the defense argued that the most analogous guideline was the one for “failure to appear by a material witness,” id., § 2J1.5.

Rejecting both contentions, the Court applied the guideline for misprision of a felony, which specifies a maximum offense level of 19, see id., § 2X4.1, and imposed both a fine and a term of imprisonment, as described above. Because Versaglio represented that the Government had control of all his disposable assets, the Court provided that the fine was not due until the Government returned the property used to secure Versaglio’s pretrial release, which would occur when Versaglio surrendered to the custody of the Attorney General. On April 18, 1995, just five days after sentencing and apparently before return of his bond collateral, Versaglio paid the fine in full.

On appeal Versaglio makes the following argument: (1) under section 401, contempt is punishable by fine or imprisonment, but not both; (2) the provisions of the SRA, specifically sections 3551 and 3571, do not alter the plain meaning of section 401; (3) if two penalties are imposed where a court may legally impose only one, the satisfaction of one penalty precludes the execution of the other; and (4) since he has paid the fine, his prison sentence must be vacated.

Discussion

1. The Validity of the Sentence

The criminal contempt statute provides:

A court of the United States shall have power to punish by fine or imprisonment, at its discretion, such contempt of its authority ... as—
(3) Disobedience ... to its lawful ... order____

18 U.S.C. § 401(3) (emphasis added). Before the SRA was passed, it was clear that a defendant convicted of criminal contempt could not be sentenced to both a fine and imprisonment under section 401. See In re Bradley, 318 U.S. 50, 51, 63 S.Ct. 470, 470, 87 L.Ed. 608 (1943) (construing similarly worded predecessor to section 401); United States v. Sampogne, 533 F.2d 766, 767 (2d Cir.1976) (holding that reasoning of In re Bradley applies to section 401). Our first issue is whether the SRA eliminates the choice of penalties that section 401 requires a sentencing judge to make. Though subsequent to the passage of the SRA, this Court affirmed section 401 sentences imposing both a fine and a term of imprisonment, see, e.g., United States v. Remini, 967 F.2d 754, 755 (2d Cir.1992); United States v. Lohan, 945 F.2d 1214, 1216 (2d Cir.1991), the dual nature of the sentence was not challenged, and we therefore had no occasion to consider the issue now squarely before us.

Section 3551 provides:

(a) In General. — Except as otherwise specifically provided, a defendant who, has been found guilty of an offense described in any Federal statute ... shall be sentenced in accordance with the provisions of this chapter____
(b) Individuals. — An individual found guilty of an offense shall be sentenced, in accordance with the provisions of section 3553, to—
(1) a term of probation as authorized by subchapter B;
(2) a fine as authorized by subchapter C; or
(3) a term of imprisonment as authorized by subchapter D.
A sentence to pay a fine may be imposed in addition to any other sentence.

18 U.S.C. §§ 3551(a) & (b) (emphasis added). Section 3551 thus expresses Congress’s general authorization for fines in every case unless some other provision of law “otherwise specifically provide[s].” Section 3571 reinforces the general statutory authorization for the imposition of a fine by providing that “[a] defendant who has been found guilty of an offense may be sentenced to pay a fine.” 18 U.S.C. § 3571(a). Section 3571 also provides:

(e) Special Rule for Lower Fine Specified in Substantive Provision. — If a law setting forth an offense specifies no fine or a fine that is lower than the fine otherwise applicable under this section and such law, by specific reference, exempts the offense from the applicability of the fine otherwise applicable under this section, the defendant may not be fined more than the amount specified in the law setting forth the offense.

Id.

Two arguments are available to avoid the disjunctive wording of section 401. The first, urged by the Government, rests primarily on section 3571. The Government argues that the “exception” phrase of section 3551 does not apply to section 401, because section 3571 requires that exceptions to “fines otherwise applicable under this section” must be made “by specific reference” in the offense statute, 18 U.S.C. § 3571(e), and section 401 does not specifically refer to the SRA. Reading section 401 to prohibit the imposition of both a fine and imprisonment is not, however, contrary to any provision of section 3571.

Section 3571 concerns the specification of fine levels. Its “exemption” language means that the fine levels specified under the SRA and the Sentencing Guidelines apply unless a lower fine is specified in another statute and that other statute specifically refers to the SRA. Section 401 does not purport to set a fine level lower than the levels specified by the SRA and the Guidelines. Its only requirement concerning a fine is that a fine may not be imposed in addition to imprisonment. Section 3571 is inapplicable to section 401, and the absence of a specific reference in section 401 to section 3571 is therefore irrelevant.

A second argument might be made from the relationship between sections 3551 and 3571, bearing in mind that Congress expressed a general preference for sentences imposing fines in addition to imprisonments. Section 3551, on its face, exempts from the SRA all statutes that conflict with the SRA, yet section 3571 purports to override some aspects of the fine provisions of other statutes. If section 3571 is to have meaning, the “except” phrase of section 3551 cannot except from the SRA all conflicting sentencing provisions. One way of reading both sections would be to limit the “except” phrase of 3551 to provisions of other statutes that concern levels of imprisonment, i.e., statutes specifying maximum and mandatory minimum prison terms, leaving section 3571 to specify when fine provisions are overridden. That reading would mean that the disjunctive phrasing of section 401 is not exempted by the “except” phrase of section 3551 from the Congressional authorization for fines as an additional penalty.

The difficulty with this argument is that' it cannot be squared with the text of the SRA The introductory phrase of section 3551 is not limited to provisions affecting imprisonment levels. That phrase therefore must be read, in conjunction with section 3571, to exempt from the sentencing scheme of the SRA a broad range of sentencing provisions in other statutes, but not the fine levels of other statutes, since such fine levels are generally overridden by section 3571. Thus, when the SRA generally states that a fine may be imposed in addition to an imprisonment and section 401 specifically provides otherwise, the introductory phrase of section 3551 preserves the disjunctive feature of section 401.

The caselaw predominantly supports our conclusion that the SRA does not alter the disjunctive aspect of section 401. Three circuits have ruled, after enactment of the SRA, that section 401 does not permit both a fine and imprisonment. See United States v. Hawkins, 76 F.3d 545, 550 (4th Cir.1996); United States v. Holloway, 991 F.2d 370, 373 (7th Cir.1993); United States v. White, 980 F.2d 1400, 1401 (11th Cir.1993). Significantly, in the Fourth and the Eleventh Circuit cases, the Government agreed that a fine and imprisonment may not both be imposed. See Hawkins, 76 F.3d at 550; White, 980 F.2d at 1401. The only contrary circuit authority is the Fifth Circuit’s dictum in United States v. Holmes, 822 F.2d 481 (5th Cir.1987), a case decided before the effective date of the SRA. Holmes indicated that section 3551, when effective, would allow both a fine and imprisonment for a violation of section 401, id. at 495-96, but declined to allow such a sentence for a contemnor sentenced in 1985 because doing so would disregard the 1987 effective date of the SRA, id. at 496.

We hold, in agreement with the circuits that have ruled authoritatively on the question, that section 401 has not been superseded by the SRA. Versaglio’s sentence is therefore invalid to the extent that it requires both a fine and imprisonment.

II. The Consequence of the Invalid Sentence

If the sentence may not validly include both a fine and imprisonment, the Government nevertheless contends that the District Court should now be afforded the option to choose between a fine and imprisonment. Versaglio contends that his payment of the fine precludes consideration of the option of imprisonment. We agree with Versaglio.

The Supreme Court first considered this issue more than 100 years ago. See Ex parte Lange, 85 U.S. (18 Wall.) 163, 21 L.Ed. 872 (1873). The Court ruled that a defendant, convicted under a statute authorizing alternative punishments of fine or imprisonment, but initially sentenced to a fine and imprisonment, could not be resentenced to imprisonment after payment of a fine. See id. at 175. Though the ruling seems influenced by the fact that the money had not only been paid to the Clerk of the sentencing court but had also “passed into the Treasury of the United States, and beyond the legal control of the court, or of any one else but the Congress of the United States,” id., the Court later reiterated the holding of Lange and made clear that payment discharged the sentence the moment the fine was paid to a court official, regardless of whether the funds were transferred to the Treasury, Bradley, 318 U.S. at 52 & n. 3, 63 S.Ct. at 471 & n. 3. However much we might be persuaded by the dissenting opinions in Lange and Bradley, we are obliged to follow the Supreme Court’s unequivocal holdings.

We have also considered the contention advanced by Judge Brown’s dissent in Holmes, 822 F.2d at 502, and are not persuaded by it. Judge Brown concluded that the Supreme Court had eroded the force of Lange and Bradley by the later decision in United States v. DiFrancesco, 449 U.S. 117, 101 S.Ct. 426, 66 L.Ed.2d 328 (1980). DiFrancesco upheld, against a double jeopardy challenge, the Government’s statutory right to appeal a sentence under specified circumstances, see 18 U.S.C. § 3576, and obtain a higher sentence on remand after a successful appeal. See DiFrancesco, 449 U.S. at 143, 101 S.Ct. at 440-41. In making that ruling, the Court rejected dictum from United States v. Benz, 282 U.S. 304, 307, 51 S.Ct. 113, 114, 75 L.Ed. 354 (1931), which, in reliance on language in Lange, had appeared to foreclose any increase of a sentence after service of the sentence had begun. The Court stated:

The holding in Lange, and thus the dictum in Benz, are not susceptible of general application. We confine the dictum in Benz to Lange’s specific context.

DiFrancesco, 449 U.S. at 139, 101 S.Ct. at 438. Judge Brown took this narrowing of Lange to mean that Lange stands only for the proposition that a defendant may not receive a sentence greater than what the legislature has authorized, and “no longer supports the proposition cited in Bradley that once an alternative penalty of a sentence is served, the Court is unable to reform the remaining “portion to make the total sentence legal.” Holmes, 822 F.2d at 504 (Brown, J., dissenting).

The majority opinion in Holmes, 822 F.2d at 496-500, and a later Supreme Court decision, Jones v. Thomas, 491 U.S. 376, 109 S.Ct. 2522, 105 L.Ed.2d 322 (1989), persuasively refute Judge Brown’s contention. Though Lange’s holding has been confined to its context by DiFrancesco, that context is precisely the one presented in Bradley, Holmes, and the pending appeal — a defendant who has paid a fine and thereby gained insulation from an alternative sentence of imprisonment. See Jones, 491 U.S. at 382-84, 386, 109 S.Ct. at 2526-28, 2528. Moreover, without a hint of disapproval, DiFrancesco quotes the key language from Lange:

The fine having been paid and the defendant having suffered one of the alternative punishments, “the power of the court to punish further was gone.”

DiFrancesco, 449 U.S. at 138, 101 S.Ct. at 438 (quoting Lange, 85 U.S. at 176). We cannot disregard two Supreme Court holdings on the basis of a third Supreme Court decision when that later decision includes language quoting, without disapproval, the key passage of one of the earlier decisions. In addition, Jones, which limited Bradley to its facts, made clear that both Lange and Bradley continue to support the proposition that where the legislature has prescribed “tru[ly]” alternative punishments for a single criminal act, satisfaction of one type of punishment precludes imposition of the other. Jones, 491 U.S. at 382-84, 109 S.Ct. at 2526-28.

Apparently accepting the continued force of Lange and Bradley, the Government nevertheless attempts to distinguish them on the ground that since Versaglio was under no duty to pay the fine until after the Government released his assets, his early payment did not operate to fulfill his sentence. We reject this argument. If a defendant surrendered himself to the custody of the prison authorities before the day he was required to do so, no court would seriously entertain the notion that the defendant should not receive credit for time served. Likewise, since the defendant paid the fine in full, and received a satisfaction of fine judgment signed by the United States Attorney’s Office, he has “suffered one of the alternative punishments to which alone the law subjected him.” Lange, 85 U.S. at 176. Moreover, the dissenters in Lange argued that the defendant in that case should not have been able to preclude imposition of imprisonment because “much reason exists to suppose” that he had induced the court clerk to deposit the fine in the Treasury “early” just to be able to avoid the alternative of imprisonment. Lange, 85 U.S. at 200 (Clifford, J., with whom Strong, J., joins, dissenting). The Lange majority evidently thought this circumstance was of no consequence.

Thus, even if it were possible for the Government now to return the fine to Versaglio, the rule of Lange and Bradley would preclude imposition of the alternative punishment of imprisonment.

III. Revision of the Amount of the Fine

Even though payment of the fine precludes imposition of imprisonment, a further question arises as to whether the amount of the fine may now be revised in light of the invalidity of the imprisonment. At first glance, the language of Lange would seem to preclude such a revision, since the Court said that upon payment of the fine, the power of the sentencing court was “gone.” Lange, 85 U.S. at 176. However, Jones explicitly rejected a literal reading of that statement, characterizing it as dicta. See Jones, 491 U.S. at 382-83, 109 S.Ct. at 2526-27. Jones and DiFrancesco have limited Lange and Bradley to their context, in which a sentencing court attempted to impose imprisonment upon a defendant who had satisfied the alternative punishment of a fine. No issue was raised in either Lange or Bradley as to a sentencing court’s power to revise the amount of a fine in fight of the unavailability of imprisonment. Indeed, such a revision could not even have been considered in Lange because the fine imposed was the statutory maximum of $200. See Lange, 85 U.S. at 164.

In some circumstances, we have upheld the authority of a sentencing court to revise upward one component of a sentence after another component was held to have been invalidly imposed. See United States v. Medina, 74 F.3d 413, 417-18 (2d Cir.1996) (permitting increased sentence on related count after invalidation of sentence on count charging violation of 18 U.S.C. § 924(e)); United States v. Diaz, 834 F.2d 287, 290 (2d Cir.1987) (same), cert. denied, 488 U.S. 818, 109 S.Ct. 57, 102 L.Ed.2d 35 (1988); see also United States v. Bohn, 959 F.2d 389, 394-95 (2d Cir.1992) (permitting consideration of imprisonment after reduction of fine); United States v. Young, 932 F.2d 1035, 1037-38 (2d Cir.1991) (permitting consideration of fine after invalidation of restitution). We have done so only where the revised sentence would be imposed on a count that was the same as, or related to, the count on which a component of the sentence was invalidated and only where the aggregate sentence was not “so severe as to create an undue risk of deterring others from subsequent challenges to sentence components that might be unlawful.” Bohn, 959 F.2d at 395. In permitting such revisions after successful challenges to a component of a sentence, we distinguished eases generally precluding revised sentences after retrial following successful challenges to a conviction, see id. at 394-95 (distinguishing United States v. Barash, 428 F.2d 328 (2d Cir.1970), cert. denied, 401 U.S. 938, 91 S.Ct. 928, 28 L.Ed.2d 217 (1971), and United States v. Coke, 404 F.2d 836 (2d Cir.1968) (in banc)).

In selecting $25,000 as the appropriate fine, we think it reasonable to assume that Judge Korman had in mind the aggregate punitive effect of his sentence. Now that the 21-month term of imprisonment is being set aside, the sentencing judge should have the option of considering whether to make an upward adjustment in the amount of the fine.

IV. The Appropriate Sentencing Guideline

Since the amount of the fine may be increased, it is necessary to assess the Government’s claim on the cross-appeal that the District Court erred in deeming misprision of a felony to be the relevant analogy for Versaglio’s contempt offense, rather than obstruction of justice. Even though Versaglio is no longer subject to imprisonment, selection of the most analogous guideline remains pertinent for determination of the appropriate range from the fine table. See U.S.S.G. § 5E1.2(c)(3).

Judge Korman used the guideline for misprision of felony, id., § 2X4.1, rather than the guideline for obstruction of justice, id., § 2J1.2(c), primarily because he concluded that the obstruction guideline, which calls for more severe punishment, would be appropriate for obstructive conduct that threatens a witness with violence, but not for Versaglio’s conduct, which involved a refusal to testify. We agree with the Government that the obstruction guideline supplies the relevant analogy, whether the obstructive conduct is the withholding of testimony after a court order to testify or more serious conduct such as threatening a witness. See Remini, 967 F.2d at 760. We appreciate Judge Korman’s concern that the severity of the guideline range for obstruction groups refusing to testify with more serious forms of obstruction, but the remedy is to apply additional sanctions appropriate for the more serious conduct, see U.S.S.G. § 2J1.2(b)(l), not to disregard the applicability of the obstruction guideline.

In this case, as in Remini, the District Court found that Versaglio refused to testify in order to obstruct the trial in which he was called as a witness. The obstruction guideline therefore supplied “the most analogous offense guideline,” id., § 2X5.1, for the criminal contempt. That guideline, in the circumstances of Versaglio’s offense, yields a base offense level of 30; with the three-level reduction for acceptance of responsibility, the offense level is 27. At that level, the fine table specifies a maximum fine of $125,000. Id. § 5E1.2(c)(3). On remand, the District Court may consider the appropriateness of revising the fine up to $125,000.

Conclusion

We vacate Versaglio’s prison sentence and remand the fine component of the sentence to afford the District Court an opportunity to revise the amount of the fine.

      . Actually, as explained in Amendment 170, section 2J1.1. of the Sentencing Guidelines, though designated a guideline, "is not a guideline contemplated by the Sentencing Reform Act.” U.S.S.G.App. C, amend. 170. The stated purpose of the provision is to refer users to the "other offenses" guideline contained in § 2X5.1. See id. It is unclear what significance, if any, this distinction achieves.

      . The Government contends that Versaglio waived his objection to the imposition of both a fine and imprisonment by not asserting it in the District Court. However, the Supreme Court has entertained this same objection despite any indication of an objection in the sentencing court, see In re Bradley, supra, as we did in Sampogne, 533 F.2d at 767, where we specifically noted the absence of an objection in the sentencing court, id.


author: McLAUGHLIN, Circuit Judge:

text:
    RAPCO, INC., Petitioner-Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.
    No. 970, Docket 95-4123.
    United States Court of Appeals, Second Circuit.
    Argued Feb. 9, 1996.
    Decided June 4, 1996.

      Stephen M. Howard, Lansdale, PA, for Petitioner-Appellant.
    Carol A. Barthel, Attorney, Tax Division, Department of Justice, Washington, DC (Loretta C. Argrett, Assistant Attorney General, Gary R. Allen, David English Carmack, Attorneys, Tax Division, Department of Justice, Washington, DC, of counsel), for Respondent-Appellee.
    Before: MeLAUGHLIN and CABRANES, Circuit Judges, and WEINSTEIN, District Judge.

       Honorable Jack B. Weinstein, of the United States District Court for the Eastern District of New York, sitting by designation.

   McLAUGHLIN, Circuit Judge:

RAPCO, Inc. (“Rapco”) appeals from a judgment of the United States Tax Court (Mary Ann Cohen, Judge). The Tax Court determined that certain compensation paid by Rapco to its president and thereafter deducted by Rapco on its corporate income tax returns was unreasonable. It ordered Rapco to pay income tax on the unreasonable amount. See RAPCO, Inc. v. Commissioner, 69 T.C.M. (CCH) 2238, 1995 WL 128452 (1995). For the reasons discussed below, we affirm.

BACKGROUND

Rapco is a Connecticut corporation engaged in the automobile salvage business. Richard Polidori, who founded Rapco in 1979, is Rapco’s president, and he owns approximately ninety-five percent of Rapco’s stock. Although Rapco was a modest and struggling business through the early 1980’s, it has since grown into a large and successful enterprise, and now operates several automobile salvage yards in various states.

Polidori, of course, has enjoyed corresponding financial success. As Rapeo’s president, he has received dramatically increasing compensation, often as end-of-the-year bonus payments:

Although another of Rapco’s officers made recommendations as to Polidori’s compensation, it was Polidori himself who ultimately determined how much he should be paid.

Polidori’s escalating salary reflected his significant role in Rapco’s growth. He was responsible for “increasing business; making acquisitions; purchasing equipment; hiring management trainees and key employees; and overseeing expansion, sales, and operations, generally.” RAPCO, 69 T.C.M. at 2240. Polidori also personally guaranteed large loans to Rapco that were instrumental in the company’s growth.

In computing its corporate income tax, a corporation may deduct from income “a reasonable allowance for salaries or other compensation for personal services actually rendered.” 26 U.S.C. § 162(a)(1). Rapco filed tax returns, always deducting the full salary and bonus paid to Polidori. The Internal Revenue Service (“IRS”), however, sent Rap-co a deficiency notice for the 1988,1989, and 1990 tax years.

The IRS informed Rapco that the total compensation paid to Polidori for those three years was unreasonable, and demanded payment of taxes on the disallowed amount:

The IRS’s determination of what constituted a “reasonable” salary and bonus for Polidori’s services was based, at least in part, on Rapeo’s pre-incorporation minutes, which provided that the president’s yearly bonus should be twenty-five percent of net operating profits, limited to a maximum of thirty-five percent of the president’s base salary.

Rapco filed a petition in the United States Tax Court, pursuant to 26 U.S.C. § 6213(a), seeking a redetermination of the deficiencies asserted by the IRS. Having set the matter for trial, the Tax Court issued a standard pre-trial order, requiring that any documents to be used at trial had to be produced to the other side at least fifteen days before the first day of the trial session. Rapco, however, gave the IRS most copies of Polidori’s promissory notes and personal guarantees of Rapco’s loans just three days before the first day of the trial session. Other documents were delivered by Rapco the very morning of the actual trial. When Rapco then offered those documents into evidence, the IRS objected, arguing that Rapco’s tardiness made it impossible for the IRS to determine the authenticity of the documents and to investigate the circumstances under which the loans and guarantees were made. The Tax Court sustained the objection and refused to admit the documents into evidence.

After trial, the Tax Court found that Rap-co failed to prove that the amounts allowed by the IRS for 1989 and 1990 were less than reasonable. Finding that the IRS had disallowed too much for 1988, however, the court added $180,000 to the amount allowed for that year. Rapco now appeals, see 26 U.S.C. § 7482(a)(1), arguing that the Tax Court erred: (1) in refusing to admit the documents pertaining to Polidori’s personal guarantees of Rapco’s loans; and (2) in finding that the amounts allowed by the IRS for the 1989 and 1990 tax years were reasonable compensation for Polidori’s services.

DISCUSSION

I. The Guarantee Documents

Rapco argues that the Tax Court abused its discretion in refusing to admit the documents pertaining to Polidori’s personal guarantees of Rapeo’s loans. Although Rap-co admits that those documents were turned over after the deadline provided in the pretrial order, Rapco asserts that the Tax Court should have amended the order to allow admission of the disputed documents. We find that the Tax Court did not abuse its discretion.

Tax Court Rule 110(e) provides that, like any other court, “[t]he [Tax] Court may, in its discretion, issue appropriate pretrial orders.” See Tax Court Rule 110(e); cf. Fed.R.Civ.P. 16(e). We review a trial court’s decision whether to amend or modify a pretrial order only for an abuse of that discretion. See Dunlap-McCuller v. Riese Org., 980 F.2d 153, 158 (2d Cir.1992), cert. denied, — U.S. -, 114 S.Ct. 290, 126 L.Ed.2d 239 (1993); Cruz v. United States Lines Co., 386 F.2d 803, 804 (2d Cir.1967); Walker v. Anderson Elec. Connectors, 944 F.2d 841, 844 (11th Cir.1991), cert. denied, 506 U.S. 1078, 113 S.Ct. 1043, 122 L.Ed.2d 352 (1993). Appropriate factors to consider include: “(1) the prejudice or surprise in fact to the opposing party; (2) the ability of the party to cure the prejudice; (3) the extent of disruption of the orderly and efficient trial of the ease; and (4) the bad faith or willfulness of the non-compliant party.” Dunlap-McCuller, 980 F.2d at 158 (citing Beissel v. Pittsburgh & Lake Erie R.R., 801 F.2d 143, 150 (3d Cir.1986), cert. denied, 479 U.S. 1088, 107 S.Ct. 1296, 94 L.Ed.2d 152 (1987)). Prejudice to the party seeking amendment or modification of the order is also relevant, as a trial court should not refuse to modify a pretrial order where manifest injustice will result. Cf. Fed.R.Civ.P. 16(e); see also Smith v. Ford Motor Co., 626 F.2d 784, 795 (10th Cir.), cert. denied, 450 U.S. 918, 101 S.Ct. 1363, 67 L.Ed.2d 344 (1981); 6A Wright, Miller & Kane, Federal Practice and Procedure § 1527 at 287 (1990).

Here, Rapco’s late delivery of the guarantee documents prejudiced the IRS. Specifically, the IRS was unable to discuss the loans with the lenders themselves, to discover the circumstances under which the guarantees were given. Although there was a nine-day delay between the first day of the trial session and the start of the actual trial, the IRS’s ability to investigate the circumstances surrounding the guarantees was severely crimped. The IRS effectively had only seven business days between Rapeo’s delivery of the documents and the trial. A thorough investigation during this time would have been difficult if not impossible — the IRS had to be ready to go to trial at any moment. See Tax Court Rule 132(c); 2A Casey, Donoghue & Doheny, Federal Tax Practice § 8.1 (1994).

Although there is no direct evidence that Rapco acted willfully in withholding the guarantee documents, it cannot go unnoticed that Rapco delivered most of these documents to the IRS on a Friday afternoon, with the trial session scheduled to start the next Monday morning. Other documents were not delivered until the morning of the trial itself, a full nine days into the trial session. Furthermore, despite having known of the deadline for six months, Rapco offered no explanation for failing to meet it other than that it had been “trying to locate [the] documents.”

Any prejudice to Rapco by exclusion of the documents was minor. As discussed below, personal guarantees of corporate loans are only one of many factors to be considered in evaluating the reasonableness of an employee’s compensation. And, as even Rapco concedes, although the guarantee documents themselves were not admitted into evidence, the Tax Court nonetheless allowed substantial testimony about the guarantees. The court was perfectly aware that Polidori had guaranteed several sizable corporate loans, and was able to consider Polidori’s personal financial exposure in making a reasonableness determination.

Under such circumstances, the Tax Court did not abuse its discretion in refusing to modify the pre-trial order to allow admission of the guarantee documents.

II. Reasonable Compensation

Rapco contends that the Tax Court erred in finding that the amounts allowed by the IRS (for the 1989 and 1990 tax years) were reasonable compensation for Polidori’s services. We disagree.

What factors are to be considered in making a reasonableness determination is a question of law, which we review de novo; but, the ultimate determination, based on those factors, that the compensation paid was “reasonable” is, at most, a mixed question of law and fact, which we review only for clear error. Cf. Bausch & Lomb Inc. v. Commissioner, 933 F.2d 1084, 1088 (2d Cir.1991); see also Owensby & Kritikos, Inc. v. Commissioner, 819 F.2d 1315, 1323-24 (5th Cir.1987) (reasonableness of compensation is a question of fact); Elliotts, Inc. v. Commissioner, 716 F.2d 1241, 1245 (9th Cir.1983) (same). The taxpayer has the burden of proving that the IRS’s determination of reasonable compensation is incorrect. See Tax Court Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115, 54 S.Ct. 8, 9, 78 L.Ed. 212 (1933). The taxpayer’s burden of showing that it is entitied to a larger deduction for compensation than allowed by the IRS is particularly heavy when that compensation is paid to a shareholder-officer. See Pepsi-Cola Bottling Co. v. Commissioner, 528 F.2d 176, 179 (10th Cir.1975).

This Court has had no occasion to enunciate comprehensively the factors to be considered in evaluating the reasonableness of employee compensation under 26 U.S.C. § 162(a)(1). The Ninth Circuit, however, in Elliotts, Inc. v. Commissioner, 716 F.2d 1241 (9th Cir.1983), exhaustively catalogued and analyzed the relevant considerations. See also Owensby & Kritikos, 819 F.2d at 1322-25 (discussing some factors). In Elliotts, the Ninth Circuit isolated five broad categories:

(1) Employee’s role in the company: including the employee’s position, hours worked, and duties performed, plus any special duties or role (such as personally guaranteeing corporate loans);
(2) External comparison with other companies: salaries paid to comparable employees in similar companies;
(3) Character and condition of the campar ny: including the sales, net income, capital value, and general economic fitness of the company;
(4) Potential conflicts of interest: ability to “disguise” dividends as salary, particularly when the employee is the sole or majority shareholder, and/or where a large percentage of the compensation is paid as a “bonus”; and,
(5) Internal consistency in compensation: consistency of the compensation system throughout the ranks of the company.

Elliotts, 716 F.2d at 1245-48.

No one factor is dispositive. See id. at 1245; Owensby & Kritikos, 819 F.2d at 1323. Furthermore, the court should assess the entire tableau from the perspective of an independent investor — that is, given the dividends and return on equity enjoyed by a disinterested stockholder, would that stockholder approve the compensation paid to the employee? See Elliotts, 716 F.2d at 1245.

We find that the Elliotts’ factors, examined from the perspective of an independent investor, are an appropriate standard to evaluate the reasonableness of employee compensation. These factors adequately balance the company’s financial fitness and role in the market, and the employee’s responsibility for that role. They also require a suitable comparison of the employee’s compensation to other employees in the same company, and similar employees in analogous companies — sturdy benchmarks for determining the reasonableness of an employee’s reward. And, these considerations properly patrol a company’s ability to substitute salary for dividends by recognizing, in the first place, a shareholder-officer’s temptation to do so, and, then, by focusing on the disinterested investor’s perspective.

We also conclude that the Tax Court’s application of these factors, and its resulting decision that the amount of Polidori’s salary allowed by the IRS was reasonable, is not clearly erroneous. The court recognized in its opinion that Polidori was a key employee — indeed the key employee — of Rapco. The court noted his contributions to Rapco’s growth, and his long hours on Rap-co’s behalf.

However, the court also observed that: (1) Rapco’s pre-incorporation minutes erected a structure for bonus compensation which Rap-co utterly ignored when paying Polidori; (2) Rapeo could point to no consistent method for bonus calculation; (3) Rapco’s compensation scheme was bonus-heavy and salary-light, suggesting masked dividends; (4) no actual dividends had been paid to anyone during the years at issue; (5) as a ninety-five percent owner of Rapco, and the ultimate decision-maker as to his own salary, Polidori had a definite conflict of interest; and (6) Rapco’s veiy own financial expert testified that, for a company such as Rapco, $400,000-$500,000 was fair compensation for Polidori’s services. Accordingly, we are not persuaded that the Tax Court’s conclusion — the amount of Polidori’s compensation allowed by the IRS for the 1989 and 1990 tax years was reasonable — is clearly erroneous.

Rapco places great weight on its belief that the Tax Court gave too little consideration to Rapco’s impressive return on equity when evaluating the likely reaction of a disinterested shareholder to Polidori’s compensation. But the court explicitly conceded that Rapco had a substantial return on equity. The Tax Court correctly acknowledged, however, that return on equity is only one factor. See, e.g., Owensby & Kritikos, 819 F.2d at 1326-27 (upholding IRS deficiency notice despite admittedly impressive return on equity); Elliotts, 716 F.2d at 1248 (remanding for consideration of return on equity as one of many factors). And, the court appropriately discounted this factor, in the absence of evidence comparing Rapco’s return on equity to that of similar companies — Rapco only produced evidence comparing its return on equity with publicly-traded, Standard & Poor’s 500 corporations.

In a similar vein, Rapco also argues that the Tax Court gave too much weight to Rap-co’s pre-incorporation minutes, which, as noted, provided that the president’s yearly bonus should be twenty-five percent of net operating profits, limited to a maximum of thirty-five percent of the president’s base salary. Rapco waves this aside, asserting that its bonus formula had been ignored for years in determining bonus amounts, and therefore had been “implicitly overruled” by Rapco’s board of directors. Rapco also claims that, in any event, the formula was outdated and unfairly limited Polidori’s compensation.

Even were we to accept this cavalier dismissal of the pre-incorporation minutes, it is obvious that the Tax Court did not rigidly enforce those provisions anyway. The court added $180,000 to the allowable amount of Polidori’s compensation for the 1988 tax year, finding that the IRS had allowed too little. This addition allowed Rapco to deduct a salary paid to Polidori that clearly exceeded the bonus formula, and brought Polidori’s allowable 1988 salary into conformity with the court’s consideration and balancing of the many factors enunciated above’.

In sum, we find (a) that the Tax Court applied the appropriate factors to determine the reasonableness of Polidori’s compensation, and (b) that the court’s conclusion that the amounts allowed for the 1989 and 1990 tax years were reasonable is not clear error.

CONCLUSION

We have considered all of Rapco’s additional arguments, and find them unavailing. Accordingly, the judgment of the Tax Court is AFFIRMED.

      . In the Tax Court, cases are scheduled to be heard during multi-day, multi-case "trial sessions.” Typically, all parties to all cases scheduled for a particular session are told to report, ready to try their case, at 10:00 AM on the first day of the trial session. At that time, the court discusses the cases with the parties to determine the approximate length of each trial, and the cases are then ordered for trial during the session, with each trial beginning upon completion of the one before. Thus, while a case is "called” on the first day of the session, the actual trial for that case may not occur until days later. See generally Tax Court Rule 132; 2A Casey, Donoghue & Doheny, Federal Tax Practice § 8.1 (1994).
      The first day of Rapco's trial session was Monday, June 6, 1994. Rapco delivered the bulk of the guarantee documents on the afternoon of Friday, June 3 — twelve days late. The trial actually started on Wednesday, June 15.

      . Because compensation to employees is deductible from the corporation’s income, but dividends paid to shareholders are not, see Owensby & Kritikos, 819 F.2d at 1322-23, the corporation will benefit by disguising "dividends” (which usually represent a share of quarterly or yearly profits) as compensation whenever possible. This is typically done by paying shareholder-employees a profit-based, year-end “bonus" — ostensibly "compensation,” but practically no different from a dividend.


author: CALABRESI, Circuit Judge:

text:
    Eugene HOLMES, Plaintiff, Margaret Holmes, as Voluntary Administrator for Eugene Holmes (Deceased), Plaintiff, and Mark Holmes, Plaintiff-Appellee, v. UNITED STATES of America, Defendant-Appellant.
    Nos. 810, 1045, Dockets 95-6009, 95-6103.
    United States Court of Appeals, Second Circuit.
    Argued Dec. 22, 1995.
    Decided June 4, 1996.

      Mark Holmes, Arlington, VA pro se.
    Teresa E. McLaughlin, Tax Division, U.S. Dept, of Justice, Washington, DC (Loretta C. Argrett & Gary R. Allen, Tax Division, U.S. Dept, of Justice, Washington, DC, and Patrick H. NeMoyer, U.S. Attorney’s Office, Western District of New York, Buffalo, NY, on the brief), for Defendant-Appellant.
    Before: JACOBS and CALABRESI, Circuit Judges, and SPATT, District Judge.

       The Honorable Arthur D. Spatt, District Judge, United States District Court for the Eastern District of New York, sitting by designation.

   CALABRESI, Circuit Judge:

Combining the advantages of apartment occupancy with those of home ownership has long been a dream of urban dwellers. But direct ownership of “flats” has not been easily achieved. In Roman law, it may well have been forbidden; and at common law, though it was permitted, it was generally viewed as dangerously cumbersome in the absence of express statutory authorization. Nowadays, laws facilitating such “condominium” ownership have been enacted in both civil and common law lands. But long before the advent of such statutes, an alternate form of apartment ownership, the real estate stock-cooperative, had been developed in this country. Once established, it survived and continues to do so despite the flourishing of condominiums. Because the stock-cooperative was, at least in part, an attempt to accomplish by indirection what could not be done simply and straightforwardly, fitting it into the legal topography has not always been easy. The case before us raises important issues of how such real-estate cooperatives are viewed by the Internal Revenue Code.

Background

In February 1984, Mark Holmes, a young man fresh from University of Chicago Law School, signed a lease to rent apartment 5M in the St. George Tower in Brooklyn Heights for $697.70 per month. The building was soon converted into a cooperative association named the St. George Tower and Grill Owners Corporation (“Corporation”). As is customary in such arrangements, the cooperative association (or “co-op”) owned the building, while those who owned the appropriate number of shares in the Corporation obtained thereby the right to occupy one of the apartments in that building.

In the summer of 1984, Mark Holmes and his parents, Eugene and Margaret Holmes, entered into a partnership (“the partnership”) to purchase from the Corporation the shares necessary to get the right to occupy apartment 5M. Mark Holmes took a one-half interest in the partnership, and each of his parents took a one-quarter interest in it. In November 1994, the partnership simultaneously 1) bought 773 shares of the Corporation for $60,000, financed entirely by a loan from Long Island Savings Bank; 2) mortgaged the shares to Long Island Savings; 3) executed a proprietary lease with the Corporation for apartment 5M; and 4) executed a lease with Mark Holmes under which he would continue to live in apartment 5M and pay, as rent to the Partnership, $550 per month for the year ending October 1985, and $600 per month for the year ending October 1986.

In 1985, the income received by the Partnership (the rent paid by Mark Holmes) was not sufficient to meet its expenses (the maintenance fees and mortgage interest). The partnership, therefore, sustained a loss, and each partner claimed a proportionate share. Accordingly, in his tax return for the 1985 tax year, Mark Holmes deducted half of the partnership’s losses, $10,136. This sum included his share of qualified mortgage interest and property taxes on the apartment (deductions that are not contested here), and one half of the remaining excess of partnership expenses over partnership income.

The IRS audited Mark Holmes and his parents and determined: 1) that the rent Mark Holmes paid was not at a fair market rate; 2) that the partnership’s rental activity was not “for profit;” and 3) that, under all the circumstances, Internal Revenue Code § 280A barred the Holmeses from taking the deductions they sought. A deficiency was assessed against them.

The Holmeses paid the taxes and interest on October 9,1988, and filed a timely administrative claim for a refund with the IRS. Mark Holmes sought a refund of $5,358.40, plus statutory interest. In October 1994, the IRS partially refunded $772 in erroneously assessed tax, plus $687.50 in interest, but otherwise denied his claim. His parents received similar treatment.

The Holmes family then brought suit in district court seeking a further refund. The case was tried to a jury, which returned a verdict in favor of Mark and his parents. In answer to special interrogatories, the jury found that the partnership’s rental activity was for profit and it further found that the partnership had charged a fair rent.

The Government filed a motion for judgment as a matter of law, or, in the alternative, for a new trial. The district court denied the motion. It concluded that there was ample evidence from which the jury could reasonably have found that the partnership was engaged in for-profit activity. The district court also found that the jury’s verdict that a fair rent had been charged was fully supported by the evidence. Holmes v. United States, 868 F.Supp. 42, 44 (W.D.N.Y.1994). It held, finally, that, regardless of fair rent and for-profit activity, “Section 280A does not apply to the ownership of shares of a cooperative corporation.” Id.

The court noted that the section limits loss deductions deriving from the rental of the taxpayer’s personal “dwelling unit,” and that § 280A(f)(l)(A) defines a “dwelling unit” as including “a house, apartment, condominium, mobile home, boat, or similar property, and all structures or other property appurtenant to such dwelling unit.” “It would be illogical,” the court stated, “to conclude that shares in or of a cooperative corporation, even though they correlate to the use of a particular apartment, were ‘similar property’ under the above definition.” Id. at 44-45.

In the face of the jury verdict, the Government sought to turn defeat into victory by arguing that even if a fair rent had been charged by a “for profit” activity, Section 280A nevertheless barred or limited the deductions at issue on other grounds. It contended, for example, that the Holmeses had failed to establish that they had entered into a “shared equity financing agreement,” within the meaning of § 280A(d)(3), and that this failure precluded the deductions under § 280A. The court, however, held that these, and other similar, government arguments had not been “presented” in the motion for a directed verdict. It therefore refused to consider them, stating that the Holmeses would be “blind-sided” if it were to entertain such theories. Id. at 46 n. 10.

The government, in this appeal, does not challenge the jury verdict and contests only a) whether Section 280A applies to the ownership of cooperative shares, and b) whether the government had preserved various claims arising under Section 280A that it asserts are valid despite the jury’s findings. The fair rental and profit motive issues are, therefore, not before us. The government, moreover, has abandoned its claims against the parents, and attacks the judgment below only to the extent that it awards a refund to Mark Holmes (“taxpayer”).

Discussion

I.

Since this case raises complicated technical issues of taxation, we begin by setting out the statutory scheme in some detail. Section 212 of the Internal Revenue Code permits a deduction for expenses “for the production or collection of income” or “for the management, conservation, or maintenance of property held for the production of income.” In many instances, such deductions can exceed the direct income that gave rise to them. And they may then be taken, by the taxpayer, against other, unrelated income. Limits on § 212 deductions are governed by §§ 261-280H of the Code.

Among these limits are those imposed by § 280A. This section states that “[ejxcept as otherwise provided ... no deduction otherwise allowable under this chapter shall be allowed with respect to the use of a dwelling unit which is used by a taxpayer during the taxable year as a residence.” The Code, as we have earlier noted, defines “dwelling unit” as a house, apartment, condominium, mobile home, boat, or similar property, and all structures or other property appurtenant to such dwelling unit.” I.R.C. § 280A(f)(l)(A).

In general, a taxpayer uses a dwelling unit as a residence when she uses the unit “for personal purposes” for the greater of 14 days or 10 percent of the number of days the unit is rented at the fair market price during the taxable year. I.R.C. § 280A(d)(l). A unit is used “for personal purposes” on any day it is used by the taxpayer, any other person who has an interest in the unit, or any “member of the family” of the taxpayer as defined in § 267(c)(4), ie., his siblings, spouse, ancestors, and lineal descendants. I.R.C. § 280A(d)(2)(A).

Section 280A(d)(3), however, creates a safe-harbor exception to these personal use rules. A taxpayer is treated as not using a dwelling unit for personal purposes if the unit “is rented, at a fair rental, to any person for use as such person’s principal residence.” In other words, if two parents buy a house and rent it at a fair price to their child as that child’s principal residence, these parents are not considered to be using the dwelling unit as a residence for purposes of § 280A(a).

But the “fair rental” exception is itself subject to a restriction: If the tenant “has an interest in the dwelling unit,” the exception applies “only if such rental is pursuant to a shared equity financing arrangement.” I.R.C. § 280A(d)(3)(B)(i). A “shared equity financing arrangement” is an agreement under which two or more persons acquire “qualified ownership interests” in a dwelling unit, and the person holding one or more of the interests is both entitled to occupy the unit and required to pay rent to one or other persons holding “qualified ownership interests” in the dwelling unit. I.R.C. § 280A(d)(3)(C). A “qualified ownership interest” is further defined in § 280A(d)(3)(D) as “an undivided interest for more than 50 years in the entire dwelling unit and appurtenant land being acquired in the transaction to which the shared equity financing agreement relates.”

Another section, § 280A(c)(5), also places a cap on the amount of deductions available in some instances when a taxpayer is subject to § 280A. In relevant part, it is linked to the personal use of a dwelling unit, and it limits deductions to the excess of the gross income derived from the rental over the deductions allocable to the rental that would be allowable whether or not it was rented (such as qualified mortgage interest and property taxes). In other words, the expenses attributable to the rental of a taxpayer’s dwelling are limited to the rental income, less the deductions that are allowed without regard to the business use of the premises (such as interest and taxes). Any further rental loss cannot be offset against unrelated income.

II.

The first question in this case is whether the district court erred by construing Section 280A as not restricting deductions of expenses incurred from the ownership of cooperative shares. If the court was correct, the taxpayer wins regardless of whether the rent was fair, or whether any of the other arguments made by the government apply. The issue was raised by the district court when it denied the government’s motion for judgment notwithstanding the verdict, and so we review the court’s decision de novo. Fiataruolo v. United States, 8 F.3d 930, 938 (2d Cir.1993).

The government maintains that a co-op is a “dwelling unit” under Section 280A, even though the text of § 280A does not specifically include co-ops. As with many other provisions in the Code, however, the statutory text contains open-ended terms to which courts must give meaning. In the case of § 280A, the government contends that “dwelling unit” and “similar property” are exactly such open-ended terms and are intended to cover coops. On its face, the argument is appealing. A co-op appears to be quite comparable to the properties specifically covered in § 280A(f)(l)(A) (“house, apartment, condominium, mobile home, boat, ... and all structures or other property appurtenant to such dwelling unit”).

The taxpayer argues, however, that a co-op cannot be a “dwelling unit” or “similar property” because one cannot inhabit shares in a corporation and that shares are not “similar” to real estate. But this argument is far too formalistic. The shares in the corporation confer the right to occupy an apartment. And, under the Code, they also grant the shareholder many other rights that are typically available only to owners of real property. Thus, the Code specifically provides that stock in a cooperative housing corporation can be defined as a principal residence for the purpose of rolling over capital gains on its sale, § 1034(f), as well as for the purpose of obtaining nonrecognition of $125,000 in capital gains on the sale of a principal residence by a taxpayer over age 55, § 121(d)(3).

Section 216 of the Code, moreover, permits a tenant-stockholder in a “cooperative housing corporation” to deduct amounts paid to the corporation to the extent that such amounts represent the proportionate share of real estate taxes and mortgage interest allowable as a deduction to the corporation. And Section 216(b)(1)(B) defines a “cooperative housing corporation” as one where each of the stockholders is entitled by reason of his ownership of stock “to occupy for dwelling purposes a house, or an apartment in a building, owned or leased by such corporation.” (Emphasis added.) Thus, the Code permits shareholders to deduct mortgage interest, real estate taxes, and depreciation by virtue of the fact that the shares convey the right to occupy a “dwelling.” Needless to say, the taxpayer in this ease took these deductions under § 216 — implicitly confirming that his stock conferred the right to “occupy [the apartment] for dwelling purposes.”

The taxpayer argues, and the district court found, however, that at one time co-ops were treated differently from other forms of real property. The taxpayer is correct that in early cases, some courts denied deductions to tenants who were stockholders in co-ops when deductions were sought for the proportionate share of the interest and real estate taxes paid by the corporations. See, e.g., Wood v. Rasquin, 21 F.Supp. 211, 213 (E.D.N.Y.1937), aff'd without op., 97 F.2d 1023 (2d Cir.1938); Holden v. Commissioner, 27 B.T.A. 530, 538, 1933 WL 188 (1933). It was in response to these cases that Congress enacted Section 216, which explicitly permits tenant-stockholders to deduct their share of these expenses. Relying on these eases, the district court reached the conclusion that, as a general matter, the Code treats co-ops differently from apartments and other real property, and that the two are treated in the same way only when there is an explicit statement in the Code. Holmes, 868 F.Supp. at 45-46. The court then noted that no such explicit language exists in § 280A, and therefore ruled for the taxpayer.

But, in fact, the court below overlooked the crucial factual posture of these early cases. These were all cases in which taxpayers sought deductions for expenses related to co-ops, even though no specific Code provision expressly authorized such deductions. The cases were therefore subject to the general presumption that vagueness in the Code must be read against deductions. Wood and its progeny simply interpreted the statutory provisions in accordance with this presumption. They certainly did not hold that co-ops were fundamentally different from other forms of property. And Congress quickly made clear, by enacting § 216 and by granting co-op owners the same deductions as other holders of real property, that the underlying similarity was in fact present and justified.

Under the circumstances, we see no reason to distinguish, for purposes of § 280A, between ownership of co-op shares that confer a right of occupancy, and ownership by title. The very purpose of the section was to prevent a taxpayer from deducting expenses associated with the normal maintenance of his own dwelling unit. This is exactly what the taxpayer here seeks to do. We therefore reverse the district court’s decision insofar as it held that “section 280A does not apply” to limit deductible losses from “the ownership of shares of a cooperative corporation.” Holmes, 868 F.Supp. at 45.

III.

Having decided that § 280A applies to co-op shares, we must now determine whether the deduction limitations of § 280A apply in this particular instance. The government litigated this case by making its argument in two steps. First, it contended that § 280A applies to co-ops. Second, it argued that the taxpayer was not protected by the fair rental exception to § 280A because a fair market rent was not charged for apartment 5M. On the second issue, the jury determined that a fair market rent was charged. And the government has declined to appeal that determination. Accordingly, the government is left in the position of arguing that, despite the fact that a fair market rent was charged, the taxpayer’s coop arrangement is, nevertheless, subject to the deduction limits imposed by § 280A.

The government attempted to raise various arguments in the post-judgment district court proceeding, all of which sought to show that, under the Code, § 280A applied in this case, even though a fair rental had been charged. The court below refused to consider any of the government’s contentions, however, because “they were not presented in the defendant’s FRCvP 50(a) motion and thus were not properly preserved.” Holmes, 868 F.Supp. at 46. On this alternate ground, the district court ruled that the taxpayer would win even if the court’s determination (that § 280A did not apply to cooperative shares) were deemed erroneous. Because we have in fact found the court’s interpretation of § 280A to be incorrect, it is to its alternate holding that we must next turn.

Federal Rule of Civil Procedure 50(a) specifies the procedures for making a motion for “judgment as a matter of law.” The motion is made during the trial, and after “a party has been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue.” Fed.R.Civ.P. 50(a)(1). A Rule 50(a) motion “shall specify the judgment sought and the law and the facts on which the moving party is entitled to the judgment.” Fed.R.Civ.P. 50(a)(2). It must be made “before the submission of the ease to the jury,” id., and, if rejected, may be renewed after the jury verdict.

Rule 50(b) governs the procedure for renewing such a motion for judgment as a matter of law. A Rule 50(b) motion can be made after the jury verdict, but only if a Rule 50(a) motion was made prior to the close of the evidence: Together, Rules 50(a) and (b) “limit the grounds for judgment n.o.v. to those specifically raised in the prior motion for a directed verdict.” Lambert v. Genesee Hosp., 10 F.3d 46, 54 (2d Cir.1993) (quoting Samuels v. Air Transp. Local 504, 992 F.2d 12, 14 (2d Cir.1993)), cert. denied, - U.S. -, 114 S.Ct. 1612, 128 L.Ed.2d 339 (1994). See also Fed.R.Civ.P. 50(b), Notes of Advisory Committee to 1991 Amendment (“A post-trial motion for judgment can be granted only on grounds advanced in the pre-verdict motion.”).

We have previously stated that “the specificity requirement is obligatory” and that its purpose is to “ensure[ ] that the other party is made aware of any deficiencies in proof that may have been overlooked.” Lambert, 10 F.3d at 54 (citing Fed.R.Civ.P. 50(b), Notes of Advisory Committee to 1991 Amendment). Requiring a party to state specific grounds for its Rule 50(a) motion “put[s] a party on notice of potential deficiencies in its proof before the case is submitted to the jury.” Id.

The government’s Rule 50(a) motion was made at the close of the Holmeses’s ease. In its oral motion, the government identified two grounds on which it was entitled to judgment as a matter of law. First, it argued that the partnership was not engaged in an activity “for profit” because it did not charge Mark Holmes “fair rent,” and therefore that the partners were not entitled to deductions for costs associated with that activity. Tr., Aug. 24, 1993, at 110-18. Second, the government contended that, even if the partnership charged fair rent, the partnership could deduct rental-related expenses under § 280A only to the extent of the income derived from the rental activity. It stated, with singular inelegance, that:

The second issue is 280A, and that is the section where if it’s a dwelling unit used as a residence for personal purposes at a below market rental, which this was in our opinion, there are limitations on what the person can do, and he can only offset the income from that activity with his deductions and any excess is not an allowable loss, whether fair market or not. So, even if Mr. Holmes paid fair rental or fair market rental, Mr. Holmes or his family can only get an offset equal to the income derived from that activity and any excess would not be allowed as a loss.

Tr., Aug. 24,1993, at 118. The government’s motion was denied.

At the close of all the evidence, the government renewed its motion:

At this time, the United States would like to renew its Rule 50 motion based upon all of the grounds as we cited and the testimony recently elicited.

Tr., Aug. 25,1993, at 216.

During the charging conference, the government specified that because Mark Holmes used the apartment for personal purposes, § 280A(c)(5) limited the partnership’s deductions to the gross income from the apartment, regardless of whether fair rent was charged. Tr., Aug. 24, 1993, at 228. At the same time, the government mentioned, in general terms, proposed Treasury regulations, id. at 231-32, but it did not explain their applicability.

In this appeal, the government makes essentially two arguments. First, it claims that the taxpayer had an “interest” in the unit under § 280A(d)(3)(A) because he was a member of the partnership that held the shares in the cooperative corporation, and that, therefore, he could not deduct losses unless he could prove that rental of the unit was pursuant to a “shared equity financing agreement.” Second, it argues that the taxpayer’s use of the dwelling unit for personal purposes places him within the ambit of § 280A(c)(5), regardless of whether a fair rent was charged.

The government clearly did not preserve its argument that, under § 280A(d)(3), the taxpayer cannot deduct losses unless he can show that the rental was pursuant to a “shared equity financing agreement.” This issue was not mentioned in the government’s Rule 50(a) motion. Nor did the government say anything, at that time, about the taxpayer’s interest in the partnership that “owned” the dwelling unit. We therefore have no occasion to rule on this § 280A(d)(3) claim. See Cruz v. Local Union No. 3, 34 F.3d 1148, 1155 (2d Cir.1994) (“[I]f an issue is not raised in a previous motion for a directed verdict, a Rule 50(b) motion should not be granted unless it is ‘required to prevent manifest injustice.’”) (citation omitted). The district court correctly held that this argument was not preserved, see Holmes, 868 F.Supp. at 46 & n. 10, and we affirm its holding.

The question of whether the government preserved its contention that § 280A(c)(5) limits the taxpayer’s deductions irrespective of fair rent is, however, more complicated. Although the government did not cite the relevant statutory provision in its Rule 50(a) motion, its argument, that “where if its a dwelling unit used as a residence for personal purposes” the taxpayer “can only offset the income ... and any excess is not an allowable loss, whether fair market or not,” may have relied on the terms of § 280A(c)(5).

The issue is not only a close one, it is one that the district court did not address specifically. It may, moreover, depend on the context in which the government made the Rule 50(a) motion, and on what the taxpayer could reasonably understand from that context.

The underlying question of the effect of § 280A(c)(5) on the availability of the deductions sought by this taxpayer is also anything but clear. The parties neither fully briefed nor argued it before us. And it was not discussed at all by the district court.

Under the circumstances, we decline to address the § 280A(c)(5) issue now, since it may be improvident to do so (the ultimate merits may never be reached due to inadequate preservation) and since we lack adequate input from the parties and the district court. Accordingly, we remand the case to the district court for consideration of whatever further arguments it deems appropriate to decide: a) whether the § 280(A)(c)(5) issue was preserved, and b) the significance of § 280(A)(e)(5) to this case if the question was in fact preserved.

Conclusion

We reverse the district court’s decision that § 280A of the Internal Revenue Code does not apply to deductible losses from the ownership of cooperative shares. We affirm the district court’s conclusion that the government is precluded from arguing that, even though a fair rent was charged, § 280A(d)(3)(A) makes § 280A applicable in this case. And we remand to the district court for a determination of whether the government preserved its claim that § 280A(c)(5) limits the taxpayer’s deductions irrespective of fair rent, as well as the merits of that contention if it was, in fact, properly preserved.

      . See Leyser, The Ownership of Flats — A Comparative Study, 7 Int’l & Comp. L.Q. 31, 33-37 (1958); Scamell, Legal Aspects of Flat Schemes, 14 Current Legal Probs. 161-62 (1961); Curtis J. Berger, Land Ownership and Use 170 (1968); Curtis J. Berger, Condominium: Shelter on a Statutory Foundation, 63 Colum. L. Rev. 987 (1963).

      . The record on appeal contains no explanation of why the IRS provided this partial refund.

      . It is a common principle of taxation that where doubt exists, courts should resolve deductions in favor of the government: "Whether and to what extent deductions shall be allowed depends upon legislative grace; and only as there is clear provision therefor can any particular deduction be allowed.” New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440, 54 S.Ct. 788, 790, 78 L.Ed. 1348 (1934).

      . In its written Pretrial Statement, the Government described the two issues of law as: 1) whether Mark Holmes was paying fair market rent, and 2) whether the activity was engaged in for profit. Pretrial Statement of the United States of America at 4. There was no mention of any other theory of tax liability in its statement.

      . See Samuels, 992 F.2d at 15 ("The moving party must set forth a statement of the specific grounds it relies on for the relief sought.”).

      . The government, on appeal, makes much of Proposed Treasury Regulation § 1.280A-l(e)(5), and argues that, under this regulation, a partner making personal use of a dwelling unit held by her partnership is subject to the limitations in § 280A(c)(5). The government, in the charging conference, mentioned "proposed regulations,” but this broad mention of regulations long after the original Rule 50(a) motion and without any specificity, is not, by itself, enough to preserve any issue.
      If, on remand, the district court finds that some part of the subsection (c)(5) issue is preserved, and the proposed regulation is helpful to the government on the merits of whatever part of the (c)(5) claim survives, it may be that the government could be permitted to rely on the proposed regulation to bolster its argument. The government may not use the proposed regulation, however, in an attempt to resurrect its contentions under subsection (d)(3). That argument was not preserved. We express no opinion concerning the force or meaning of the proposed regulation with regard to subsection (c)(5).

      . The government has also asked us to remand this case so that the district court may decide whether the taxpayer should be subject to negligence penalties. This we will not do. The government may, or may not, ultimately win on the § 280A(c)(5) argument. But the taxpayer’s actions, and the arguments he has made in this case, in no way suggest negligence. Negligence under § 6653 of the Code is the lack of due care or the failure to do what a reasonable and prudent person would do under similar circumstances. Allen v. Commissioner, 925 F.2d 348, 353 (9th Cir.1991). It is obvious to us, as it should have been to the government, that the taxpayer in this case did not act negligently. One may disagree, as we did, with the taxpayer on whether or not § 280A applies to cooperative stock, but the government's bald claim that the taxpayer did not exercise due care in making his argument is little short of reprehensible. And its persistence in asserting the negligence claim even after it lost below is mind boggling. Both bespeak of bullying tactics employed against someone who did no more than exercise his right to question the government’s chosen reading of the tax laws. We therefore not only reject the claim of negligence in this case, but caution the government against making like claims in similar situations where the law is, at best, unclear.


author: PARKER, Circuit Judge:

text:
    UNITED STATES of America, Appellee-Cross-Appellant, v. Domenico CEFALU, Appellant-Cross-Appellee.
    Nos. 787, 890, Dockets 95-1225, 95-1269.
    United States Court of Appeals, Second Circuit.
    Argued Dec. 22, 1995.
    Decided June 4, 1996.

      Joseph W. Ryan, Jr., Uniondale, NY (M. Elisabeth Bergeron, Uniondale, NY, on the brief), for Appellant-Cross-Appellee.
    Andrew Weissmann, Assistant United States Attorney, Brooklyn, NY (Zachary W. Carter, United States Attorney, Eastern District of New York, David C. James, Assistant United States Attorney, Brooklyn, NY, of counsel), for Appellee-Cross-Appellant.
    Before: KEARSE, MAHONEY and PARKER, Circuit Judges.
   PARKER, Circuit Judge:

I.

BACKGROUND

Defendant Cefalu was convicted and sentenced for criminal contempt in the United States District Court for the Eastern District of New York, Judge Edward R. Korman. After several lengthy sentencing hearings, the court sentenced defendant to thirty-three months imprisonment pursuant to 18 U.S.C. § 3553(b). Both the defendant and the government appeal the sentence. Because we find no error, we affirm the district court.

A grand jury called defendant to appear as a witness in an investigation of Patsy Conte, a captain in the Gambino family. Defendant was granted immunity and he offered testimony before the grand jury; however, at a certain point he refused to answer any further questions. Defendant was held in civil contempt by the district court, Judge Reena Raggi. He served eighteen months, the maximum time, in jail for civil contempt and was released on February 6,1994.

Meanwhile, on December 23, 1993, he was called to testify in the Conte trial. Conte was charged with conspiracy to distribute heroin. Defendant was again granted immunity, refused to testify and was held in civil contempt. His confinement for this civil contempt lapsed on January 4, 1994, when the Conte trial concluded. The court declared a mistrial because of a hung jury.

. The grand jury returned an indictment charging defendant with criminal contempt for his refusal to testify during the Conte trial. On February 6,1994, after completing his civil contempt sentence, defendant was arraigned on the criminal contempt indictment. He waived his right to a jury trial. At a bench trial before Judge Korman he offered no evidence in his own defense and was found guilty of criminal contempt in violation of 18 U.S.C. § 401.

II.

DISCUSSION

In this case, we review a sentencing judge’s efforts to wind his way through the Sentencing Guidelines and the relevant statutory provisions. Judge Korman expressed some frustration with the fact that there is no clear guideline provision covering one of the most standard forms of contempt: refusal to testify in violation of a valid court order. While we appreciate the court’s concern, we also understand the Commission’s hesitancy to prescribe a particular sentencing range for a crime that is as highly variable and context specific as contempt. Given the vague sentencing provision for contempt, Judge Korman did a commendable job of working through the various relevant provisions, ultimately fashioning a rational, appropriate sentence for the defendant.

A. The Contempt Guideline

The Contempt guideline, § 2J1.1 of the United States Sentencing Guidelines (“USSG”), directs the district court to apply USSG § 2X5.1 when imposing a sentence for criminal contempt. In the absence of a sufficiently analogous guideline, Section 2X5.1 references 18 U.S.C. § 3553(b). Explaining the lack of a specific sentencing range for contempt, the Commission stated:

Because misconduct constituting contempt varies significantly and the nature of the contemptuous conduct, the circumstances under which the contempt was committed, the effect the misconduct had on the administration of justice, and the need to vindicate the authority of the court are highly context-dependent, the Commission has not provided a specific guideline for this offense.

USSG § 2J1.1, comment (n. 1). Section 2X5.1 states that the court is to apply the most analogous offense guideline, or if there is no sufficiently analogous guideline, to proceed under the provisions of 18 U.S.C. § 3553(b), applying the guidelines and policy statements to the extent they are applicable. The statute provides:

In the absence of an applicable sentencing guideline, the court shall impose an appropriate sentence, having due regard for the purposes set forth in [18 U.S.C. § 3553] subsection (a)(2)____ [T]he court shall also have due regard for the relationship of the sentence imposed to sentences prescribed by guidelines applicable to similar offenses and offenders, and to the applicable policy statements of the Sentencing Commission.

18 U.S.C. § 3553(b)(1994). The legislative history of § 3553(b) explains that “[t]his language is necessary to provide for the situation where there may be no guideline.” H.R.Rep. No. 797, 99th Cong., 2d Sess. 19 (1986), reprinted in 1986 U.S.C.C.A.N. 6138, 6142. Thus, in cases in which the crime does not fit neatly within any of the guidelines, the statutory provision gives the court some direction in sentencing. In such cases, the sentencing judge has considerable discretion to fashion an appropriate sentence for the crime.

The structure of the guidelines for contempt and the Commission’s clear recognition that the crime is a highly varied one suggest that in certain circumstances there will be no applicable sentencing guideline for contempt. See United States v. Underwood, 880 F.2d 612, 619 (1st Cir.1989) (holding that there is no applicable sentencing guideline for contempt). A sentence imposed for an offense for which there is no applicable sentencing guideline will only be reversed if it is plainly unreasonable. 18 U.S.C. § 3742(e)(4) (1994). Thus, we must determine first whether there is a sufficiently analogous guideline, and if not, whether the sentence is plainly unreasonable.

B. Other Potentially Applicable Guidelines

Cefalu maintains that USSG § 2J1.5, the guideline for Failure to Appear by a Material Witness, is the most analogous guideline. This provision derives from the statute concerning people released on bail who wilfully fail to appear in court. 18 U.S.C. § 3146(a) (1994). Judge Korman found that the Failure to Appear guideline was not sufficiently analogous because it did not address the seriousness of the crime being prosecuted in the Conte ease. Judge Korman went on to determine that Cefalu acted in bad faith because he sat in open court and refused to obey a lawful order of the court..

In arguing that Failure to Appear by a Material Witness is the most analogous guideline, Cefalu relies primarily on United States v. Underwood, 880 F.2d 612 (1st Cir.1989), in which the court held that a three year sentence imposed by the district court for refusal to testify was plainly unreasonable, and that a sentence similar to that for Failure to Appear by a Material Witness, § 2J1.5, was more appropriate. However, Underwood is easily distinguished from this case because in Underwood the trial court found that the defendant had acted on a good faith belief that there was a legal basis for refusing to answer, whereas in this case the court found that the defendant acted in bad faith. This court has previously refused to follow Underwood in a contempt case in which the district court found that the defendant intended to obstruct justice. United States v. Remini, 967 F.2d 754, 760 (2d Cir.1992). Given the finding that Cefalu intended to obstruct justice, it was not error for the court to find that the Failure to Appear by a Material Witness guideline was not sufficiently analogous to be useful in this case.

The government argues, on the other hand, that because the court found that Cefalu intended to obstruct justice, the most analogous guideline is § 2J1.2, which corresponds to Obstruction of Justice. Judge Korman provided several reasons for rejecting the Obstruction of Justice guideline. First, he explained that although he found an intent to obstruct justice, he did not believe that the Obstruction of Justice Guideline was sufficiently analogous because the examples provided in the Obstruction guideline deal with affirmative acts of wrongdoing, indicating that something more than the mere failure to answer a question may be required. He thought it was telling that although the form of contempt at issue is one of the most common forms of contempt, none of the examples provided in the Obstruction of Justice guideline mention anything about simple failure to answer questions. In addition, Judge Korman noted that although the Obstruction guideline covers a wide range of behavior, it does not differentiate in terms of the punishment prescribed. The judge thought that this lack of flexibility was particularly problematic in this ease because Cefalu would have received the same punishment under § 2J1.2 as if he had committed a far more serious form of obstruction. Finally, Judge Korman had doubts as to whether Cefalu’s behavior amounted to substantial interference with the administration of justice. For each of these reasons Judge Korman did not think the Obstruction of Justice Guideline was sufficiently analogous.

The government argues that under Remini Cefalu must be sentenced under the Obstruction of Justice Guideline because he committed criminal contempt with an intent to obstruct justice. At the outset, we find that Remini is distinguishable on its facts. The evidence of intent to substantially interfere with the administration of justice in order to help the defendants on trial was far greater in Remini than in the instant case. In Remini the court relied on a taped phone conversation in which John Gotti, Remini’s boss, told a third party that he had instructed his lawyers to “get Fat Georgie’s [Remini’s] cell ready. And nobody is taking the stand.” Remini, 967 F.2d at 756 (brackets in original). The district court in Remini found that this conversation clearly demonstrated that Remini intended to help the defendants, who also worked for Gotti, and obstruct justice when he refused to testify. In this case, the court explained that the refusal to testify in the absence of any explanation, such as fear of reprisal, demonstrated bad faith and an intent to obstruct justice.

Thus, in our view, the factual distinction between this case and Remini is sufficient that Remini does not control. In addition, Judge Korman, who was clearly familiar with Remini, determined that the application of USSG § 2X5.1 to the facts of this case did not call for the utilization of the Obstruction of Justice guideline, and we are directed to “give due deference to the district court’s application of the guidelines to the facts.” 18 U.S.C. § 3742(e).

Even absent the factual distinctions between Remini and this case, the government’s argument fails. The government maintains that once the court found that Cefalu intended to obstruct justice, it was bound to sentence him under § 2J1.2. Remini, however, does not indicate that sentencing under the Obstruction of Justice guideline is required once there has been a finding of intent to obstruct justice. Remini, 967 F.2d at 760 (“Because the district court found that Remini intended to obstruct justice, the court’s choice of the Obstruction of Justice guideline was not in error.”) Rather, in Remini the court simply held that the trial court had not erred when it sentenced under the Obstruction of Justice guideline.

Although it has some appeal in that it is predictable, the government’s argument ultimately must fail because many crimes, including Contempt and Misprision of Felony, are offenses which by their very nature obstruct justice. In recognition of this, USSG § 3C1.1, the guideline corresponding to the Adjustment for Obstruction of Justice, does not apply in cases involving Contempt, Obstruction of Justice, Perjury, Failure to Appear by a Material Witness, Failure to Appear by a Defendant, Payment to a Witness, Accessory After the Fact, and Misprision of Felony. See USSG § 3C1.1, comment. (n. 6). Given this wide variety of obstruction offenses, each with their own guideline provisions, courts cannot be bound to sentence under the Obstruction of Justice Guideline any time they find an intent to obstruct justice. We reject the government’s argument; a finding of intent to obstruct justice does not require sentencing under the Obstruction of Justice Guideline in every instance.

In short, we reject the arguments in favor of sentencing under the Obstruction of Justice guideline, and we find no error in Judge Korman’s reasons for declining to sentence under that guideline. We now turn to the question of whether, in the absence of a sufficiently analogous guideline, the court imposed a plainly unreasonable sentence.

C. The Misprision of Felony Guideline

Having properly determined that there was no sufficiently analogous guideline, Judge Korman, following USSG § 2X5.1, proceeded under 18 U.S.C. § 3553(b). In keeping with the directions of § 3553(b), the court looked to the guidelines for direction and decided that Misprision of Felony was somewhat analogous to defendant’s refusal to testify. Since he found that Misprision of Felony was similar, he considered the base offense level for USSG § 2X4.1, the Misprision of Felony guideline, in determining the sentence. In addition, the court considered the factors discussed in § 3553(a)(2): the need for the sentence to reflect the seriousness of the offense, to promote respect for the law, to provide for just punishment for the offense, and to afford adequate deterrents to criminal conduct. The court imposed a sentence of thirty-three months.

The parties both argue that the court incorrectly referred to the Misprision of Felony guideline in determining the appropriate sentence for Cefalu. Misprision of Felony has its roots in the common law which recognized a duty to raise a “hue and cry” and report a felony to the authorities. Branzburg v. Hayes, 408 U.S. 665, 696, 92 S.Ct. 2646, 2664, 33 L.Ed.2d 626 (1972). Misprision of Felony has been statutorily codified at 18 U.S.C. § 4:

Whoever, having knowledge of the actual commission of a felony cognizable by a court of the United States, conceals and does not as soon as possible make known the same to some judge or other person in civil or military authority under the United States, shall be fined not more than $500 or imprisoned not more than three years, or both.

The elements of Misprision of Felony are 1) the principal committed and completed the alleged felony; 2) defendant had full knowledge of that fact; 3) defendant failed to notify the authorities; and 4) defendant took steps to conceal the crime. United States v. Ciambrone, 750 F.2d 1416, 1417 (9th Cir.1984); United States v. Baez, 732 F.2d 780, 782 (10th Cir.1984).

The district court determined that Misprision of Felony, though not a perfect fit, was similar because it addresses the defendant’s withholding of information concerning a crime. The court found that there was clearly sufficient evidence to show the existence of a conspiracy. In addition, the court believed that Cefalu had knowledge of the underlying felony, but refused to relate that information to the court. The court based this determination on the fact that Cefalu remained silent in the face of a court order to testify despite having been immunized. In addition, the court knew that there had been testimony at trial that Cefalu was a member of Conte’s crew. The third and fourth elements, failure to notify and attempt to conceal, are easily satisfied given defendant’s persistent refusal to testify in violation of a valid court order. None of the factual findings were clearly erroneous.

Judge Korman offered many reasons for sentencing Cefalu as he did. He thought Cefalu’s crime was analogous to Misprision of Felony because both involve the withholding of information concerning a crime. He also indicated that he thought the guideline range for Misprision of Felony was a helpful reference. Judge Korman believed that a sentence of thirty-three months was needed to promote respect for the law, to provide for just punishment for the offense, and to deter criminal conduct. This is exactly what 18 U.S.C. § 3553(b) instructs judges to do. We see no error in the decision to refer to the Misprision of Felony guideline.

CONCLUSION

While it is true that there may be strong arguments for referring to either the Obstruction of Justice guideline or the Failure to Appear by a Material Witness guideline, neither the government nor the defendant have demonstrated that it was plainly unreasonable for the court to refer to the Misprision of Felony guideline to determine an appropriate sentence for Cefalu. We have reviewed both parties’ claims, cognizant that we must accept the findings of the district court unless they are clearly erroneous and that we must give “due deference to the district court’s application of the guidelines to the facts.” 18 U.S.C. § 3742(e)(4) (1994); United States v. Kirsh, 54 F.3d 1062, 1072 (2d Cir.1995), cert. denied, — U.S. -, 116 S.Ct. 330, 133 L.Ed.2d 230 (1995). We see no error in the district court’s calculation and imposition of a thirty-three month sentence. Accordingly, we affirm the judgement of the district court.

      . Judge I. Leo Glasser presided over the Conte trial.

      . The purposes set forth in subsection (a)(2) include promoting respect for the law, reflecting the seriousness of the crime, providing just punishment for the offense, deterring future crime, protecting the public, and providing the defendant with training, care, and other correctional treatment. 18 U.S.C. § 3553(a)(2).

      . The Contempt guideline was amended in 1989. The pre-amendment provision directed the court to "impose a sentence based on stated reasons and the purposes of sentencing set forth in 18 U.S.C. § 3553(a)(2).” USSG § 2J1.1 (1988). The application note to the provision directed the court to 2X5.1. Id., comment (n. 1). That provision does not differ significantly from the amended provision, thus the analysis in Underwood remains relevant.

      . The background to the Obstruction of Justice guideline explains:
      Numerous offenses of varying seriousness may constitute obstruction of justice: using threats or force to intimidate or influence a juror or federal officer; obstructing a civil or administrative proceeding; stealing or altering court records; unlawfully intercepting grand jury deliberations; obstructing a criminal investigation; obstructing a state or local investigation of illegal gambling; using intimidation or force to influence testimony, alter evidence, evade legal process, or obstruct the communication of a judge or law enforcement officer; or causing a witness bodily injury or property damage in retaliation for providing testimony, information or evidence in a federal proceeding. The conduct that gives rise to the violation may, therefor, range from a mere threat to an act of extreme violence.
      USSG 2J1.1, comment, (backg’d).

      . There was some concern that Cefalu refused to testify out of fear of reprisal. The court thought it unlikely that the defendant would spend eighteen months in jail for civil contempt, followed by a criminal contempt charge and sentence for criminal contempt, if he did not believe that testifying wotdd put him in serious physical danger. (A 197, 230). Cefalu, however, never told the court that the reason he refused to testify was because he was afraid of reprisal.

      . In the usual case, a district court’s selection of an applicable guideline presents a legal question that is reviewed de novo. See United States v. Mucciante, 21 F.3d 1228, 1237 (2d Cir.) (sentencing legal issues reviewed de novo), cert. denied, - U.S. -, 115 S.Ct. 361, 130 L.Ed.2d 315 (1994); United States v. Hershkowitz, 968 F.2d 1503, 1505 (2d Cir.1992) (“Because appellant does not contest the district court's findings of fact, but rather its interpretation of the Sentencing Guidelines, our review is de novo."); see also United States v. Lambert, 994 F.2d 1088, 1091 (4th Cir.1993) ("We review challenges to the district court’s guideline selection de novo.”). However, the determination under USSG § 2X5.1 as to whether there is a single "most analogous offense guideline,” and, if not, how to proceed under 18 U.S.C. § 3553(b), involves the application of a guideline to the facts of a case, and 18 U.S.C. § 3742(e) mandates that we give “due deference" to such applications by the district court, rather than review them de novo.

      . Application note 6 provides;
      Where the defendant is convicted for an offense covered by § 2J1.1 (Contempt), § 2J1.2 (Obstruction of Justice), § 2J1.3 (Perjury or Subornation of Perjury; Bribery of Witness), § 2J1.5 (Failure to Appear by a Material Witness), § 2J1.6 (Failure to Appear by a Defendant), § 2J1.9 (Payment to Witness), § 2X3.1 (Accessory After the Fact), § 2X4.1 (Misprision of Felony), this adjustment is not to be applied to the offense level for that offense except where a significant further obstruction occurred during the investigation, prosecution, or sentencing of the prosecution for the obstruction offense itself (e.g., where the defendant threatened a witness during the course of the prosecution for the obstruction offense).
      USSG § 3C1.1, comment, (n. 6)

      . Section 2X4.1 sets the base offense level 9 levels lower than the offense level for the underlying offense, but in no event less than 4 or more than 19.

      . The court chose the base offense level of 19, which has a range of thirty-three to forty-one months for someone in criminal history category II.

      . Defendant misses the point when he argues that he cannot be sentenced under the Misprision of Felony guideline because the government did not prove each element beyond a reasonable doubt. He was not charged with Misprision of Felony, nor was he sentenced for Misprision of Felony; the court merely considered the Misprision of Felony guideline as a reference in determining an appropriate sentence under 18 U.S.C. § 3553(b). In addition, each element was proven by a preponderance of the evidence, the relevant standard for purposes of sentencing. United States v. Sasso, 59 F.3d 341, 353 (2d Cir.1995).