Estate of Philip Meriano, Deceased, Anita Panepinto, Administratrix v. Commissioner of Internal Revenue Service

OPINION OF THE COURT

ROTH, Circuit Judge:

In this case, we must decide whether an estate is entitled to a theft loss deduction under the federal tax code for funds wrongfully paid out from an estate and never returned. The decedent, Philip Meriano, left an estate that included over one million dollars worth of bearer bonds. The bonds had been stolen from Meriano but were later returned to the estate. Excessive fees and costs were charged against the estate by the stockbroker and the attorney/investigator who had retrieved the bonds and administered the estate. The IRS assessed the estate with a…