David D. Beck, A/K/A Dave Beck v. United States

BARNES, Circuit Judge.

The taxability of embezzled funds has been the subject of legal dispute for several years. This court in 1945, under certain limited facts, 1 held that when an embezzler takes money from an employer with no conceivable claim or colorable claim of right to it, it at no time becomes a taxable “gain” or “profit” or “income” to the embezzler, within the definition of “gross income” as defined in Section 22 of the Internal Revenue Code of 1939 (26 U.S.C. § 22). Wilcox v. Commissioner, 9 Cir. 1945, 148 F.2d 933. This court agreed with the fifth circuit opinion of McKnight v.…