Frank Hoover Easterbrook

Gift — Union League Club of Caicago — Signing »rivileges

1

(Part III):

I have received the approval of Chief Judge

Flaum to teach at the University of Chicago. This income

therefore is

“outside earned income” rather than an

“honorarium” within the meaning of the Ethics Reform Act of

1989.

I accepted gross income exceeding the statutory cap

(15% of Level II of the Executive Schedule) because,

under

§3(b) of the regulations of the Judicial Conference

implementing this statute,

“outside earned income”

includes

only net taxable income,

and therefore

excludes pension

contributions as well as the “ordinary

and necessary

expenses paid or incurred in producing

this income.”

Some

contributed to a

of the income reported in Part III was

pension plan through the University of

Chicago as part of a

salary reduction plan and therefore does not count for

statutory purposes. Moreover, the ordinary and necessary

expenses of producing the income—including the cost of

commuting between the courthouse and the Law School,

fees

for parking at the University,

and the expenses of

equipment and books for my Law School office—are

substantial. Net taxable income is less than the statutory

maximum.

2

(Part V) The Union League Club extends to federal judges

the privilege of using the Club's facilities without formal

membership. During 2006 it charged $60 per month for these

privileges from January through June and $68.00 per month

from July through December.

The difference between this

and the market value is a gift, but whether there is any

difference and,

if so,

its size,

is difficult to determine.

Judges pay the same for meals,

haircuts,

and other services

as do regular members of the Club.

3

(Part VII): Dividends and capital gain distributions

from the mutual funds marked

“See Part VIII”

are reinvested

automatically monthly. Shares were purchased and sold in

the Vanguard Prime Money Market Fund occasionally. I treat

this as a checking account, and as in past years I do not

report these flows (as opposed to year-end balances).

Shares of the Vanguard High-Yield Tax Exempt Fund with the

value code of N were sold during 2006;

these sales produced

taxable capital gains with a value code of D.

No other

transactions occurred in these funds.

The names of the

Vanguard mutual funds have changed since last year’s report

(e.g.,

“Vanguard Index Fund” becomes “Vanguard 500 Index

Fund”) to match Vanguard’s current nomenclature.

Only the

names have changed;

all investments have remained in the

same funds.