Rainbow Inn, Inc., Edmund Jezemski, Sec.-Treas., Clayton, New Jersey v. Commissioner of Internal Revenue

OPINION OF THE COURT

GIBBONS, Circuit Judge.

Appellant taxpayer seeks review, pursuant to 26 U.S.C. § 7482, of the decision of the Tax Court which disallowed a claimed embezzlement loss deduction for the taxable year ending June 30, 1962 on the ground that taxpayer had a reasonable prospect of recovery until 1964. At issue is the year of deductibility of an embezzlement loss of $33,013.37. If the taxpayer is entitled to the claimed deduction in 1962, net operating loss carry-backs to the years ending June 30, 1959, June 30, 1960, and June 30, 1961 will result.

Taxpayer, a New Jersey corporation,…