Sigitas Banaitis v. Commissioner of Internal Revenue

Sigitas Banaitis appeals the United States Tax Court’s entry of judgment in favor of the Commissioner of Internal Rev enue regarding a $1,708,216 deficiency in Banaitis’ 1996 income tax. We affirm in part and reverse in part.

I

From 1980 until late 1987, Sigitas Banai-tis, an Oregon resident, worked as a vice president and loan officer with the Bank of California. On behalf of the Bank of California, Banaitis developed grain-focused finance activity in Portland, Oregon, then the largest grain exporting port on the west coast. Banaitis had access to private information regarding the companies with which he worked. This private information included, among other things, data regarding these companies’ comparative financial, inventory, and margin strengths, as well as information regarding their respective profitabilities. Much of this information was culled from confidential financial statements. To ensure the security of this information, Banaitis and the Bank of California executed confidentiality agreements.

Sometime in 1984, Mitsubishi Bank acquired a controlling interest in the Bank of California. Mitsubishi Group, Ltd., Mitsubishi Bank’s parent company and then the…