344 U.S. 167 (1952), Alison v. United States

Citation:344 U.S. 167, 73 S.Ct. 191, 97 L.Ed. 186
Party Name:Alison v. United States
Case Date:December 08, 1952
Court:United States Supreme Court
 
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Page 167

344 U.S. 167 (1952)

73 S.Ct. 191, 97 L.Ed. 186

Alison

v.

United States

United States Supreme Court

Dec. 8, 1952

CERTIFICATE FROM THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Syllabus

Sections 23(e) and (f) of the Internal Revenue Code provide that, in computing net income for the purpose of the federal income tax, there shall be allowed as deductions "losses sustained during the taxable year." Treasury Regulations provide that "A loss from theft or embezzlement occurring in one year and discovered in another is ordinarily deductible for the year in which sustained."

Held:

1. Whether and when a deductible loss results from an embezzlement is a factual question, a practical one to be decided according to surrounding circumstances. Pp. 169-170.

2. Under the special factual circumstances found by the District Courts in the two cases here involved, the taxpayers were entitled, under the Code provisions and the Treasury Regulations, to deductions for the year in which the embezzlement losses were discovered and their amounts ascertained. Pp. 168-170.

97 F.Supp. 959, reversed; 98 F.Supp. 252, affirmed.

No. 79. In an action for a refund of income taxes, the District Court gave judgment against the taxpayer. 97 F.Supp. 959. The Court of Appeals certified a question to this Court, which ordered the entire record sent up. Reversed, p. 170.

No. 80. In an action for a refund of income taxes, the District Court gave judgment for the taxpayer. 98 F.Supp. 252. The Court of Appeals certified a question to this Court, which ordered the entire record sent up. Affirmed., p. 170.

Page 168

BLACK, J., lead opinion

MR. JUSTICE BLACK delivered the opinion of the Court.

The questions in these two income tax cases are so much alike that they can be treated in one opinion. Both taxpayers had moneys embezzled by trusted agents and employees. As usual, the defalcations had been going on for many years before they were discovered. On discovery, efforts were made immediately to identify the takers and fix the dates and amounts of the thefts. In the Alison case, No. 79, the books revealed the thief and the precise amounts taken each year from 1931 to 1940. In No. 80, Stevenson-hislett, Inc., the cover-p had been so successful that painstaking investigation failed to reveal who took the funds or the time when the...

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