Mazzei v. Commissioner
United States Tax Court
The taxpayer entered into a conspiracy to produce counterfeit U.S. currency. However, the real intent of two of his coconspirators was to defraud the taxpayer. When the taxpayer provided currency which was supposed to be used in the reproduction process it was taken from him by fraud. Held: While the taxpayer may have sustained a "theft" loss, it was the direct result of the criminal conspiracy on his part.
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The taxpayer entered into a conspiracy to produce counterfeit U.S. currency. However, the real intent of two of his coconspirators was to defraud the taxpayer. When the taxpayer provided currency which was supposed to be used in the reproduction process it was taken from him by fraud. Held: While the taxpayer may have sustained a "theft" loss, it was the direct result of the criminal conspiracy on his part. Therefore, the loss was not an allowable deduction under sec. 165(c)(2) or sec. 165(c)(3), I.R.C. 1954. Luther M. Richey, Jr., 33 T.C. 272 (1959).
1Dissent
Sterrett, /.,
I respectfully dissent from the majority opinion for the following reasons:
In Tank Truck Rentals v. Commissioner, 356 U.S. 30, 33, 35 (1958), the Supreme Court laid down the test for denying a deduction on the grounds of public policy. An otherwise allowable deduction may be denied if allowance would “severely and immediately” frustrate “sharply defined national or State policies proscribing particular types of conduct, evidenced by some governmental declaration thereof.” Frustration of a particular State policy “is most complete and direct when the expenditure for which…
2Cases cited8 opinions
- Commissioner v. HeiningerSupreme Court of the United States · 1943
- Commissioner v. TellierSupreme Court of the United States · 1966
- Tank Truck Rentals, Inc. v. CommissionerSupreme Court of the United States · 1958
- Lilly v. CommissionerSupreme Court of the United States · 1952
- Commissioner v. SullivanSupreme Court of the United States · 1958
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