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

Alison v. United States


Argued November 12, 1952
Decided December 8, 1952 GO>*
344 U.S. 167

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.