Muncie v. Comm'r of Internal Revenue

• Decision Date: 06 August 1952
• Docket Number: Docket No. 35472.
• Citation: 18 T.C. 849
• Parties: CURTIS H. MUNCIE, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Tax Court

18 T.C. 849

CURTIS H. MUNCIE, PETITIONER,

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 35472.

Tax Court of the United States.

Promulgated August 6, 1952.

Where the petitioner was the victim of the so called ‘Spanish prisoner‘ swindle and the facts were such that under the law of Mexico, the place where the swindle took place, the swindlers had committed the crime of theft, held, the petitioner is entitled to deduct the amount of his loss under the provisions of section 23(e)(3) of the Internal Revenue Code in the taxable year 1947, the year in which the theft occurred. John E. Hughes, Esq., and Harold R. Burnstein, Esq., for the petitioner.

Paul M. Stewart, Jr., Esq., for the respondent.

The respondent determined a deficiency in income tax against the petitioner for the taxable year ending December 31, 1947, in the amount of $7,902.14, most of which is here in controversy.

The issue before us is whether the petitioner is entitled to deduct $8,500 as a loss from theft in the taxable year 1947.

FINDINGS OF FACT.

The petitioner resides in New York, New York, and for the calendar year 1947 filed his Federal income tax return with the collector of internal revenue for the second district of New York.

Petitioner, a practicing physician in New York City for 41 years, received a letter dated November 18, 1947, from Mexico City, Mexico, signed by one Julian Silva, stating that a party was imprisoned in Mexico City for bankruptcy and desired the petitioner's help in saving $375,000 in bills hidden in a secret compartment of a truck checked in a custom house in the United States. It also stated that the party owned a suitcase containing the baggage check to the truck and a certified bank check for $25,000 payable to bearer, which suitcase would be released upon payment of cost of trial, and that if the petitioner would help save the writer's fortune the writer would give petitioner one-third of the above-mentioned amounts.

Petitioner promptly replied by letter to the address given, stating that he would help if the details justified. He received a letter from Mexico City from Andres Diaz, dated December 2, 1947, stating the fine and costs to be paid as $8,300 and that he had 35 days' time in which to pay them, at which time his suitcase would be returned to him, and urging the petitioner to come to Mexico City and pay the cost of trial and fine. To this the petitioner replied by letter dated December 7, 1947, stating that he would come to Mexico City as requested.

On December 15, 1947, petitioner withdrew by two checks $9,000 from his bank account at the City National Bank of New York and went to Mexico City. There he met two men, one of whom posed as a prison guard acting for the man whom the petitioner intended to aid, who gave to him what purported to be a trunk check and a certified check for $25,000 purportedly drawn by the Bank of London & South America Limited on the Agency of National City Bank of New Orleans, Louisiana, United States of America, and accepted by it. Upon receipt of these documents the petitioner sent a telegram to New Orleans asking if check and baggage receipt were genuine and later was handed purported replies verifying the genuineness of the documents. He then, on December 22, 1947, handed the alleged guard $8,500 in bills, and on the same date flew to Laredo, Texas, and waited as instructed by letter.

On December 24 he received by mail an unsigned typewritten note to the effect that all was lost and instructed him to go home and await news there. The note closed with the advice, ‘Do not become impatient, as calm is the solution for every difficult thing.‘ The petitioner went back to New York and upon presenting the alleged certified check to the National...