Morris Plan Co. of St. Joseph v. Commissioner

*1193OPINION.

Aenold :

There is no serious dispute in this proceeding with regard to the principal facts. Petitioner purchased notes secured by chattel *1194mortgages, which were represented to be genuine but were later discovered to be forgeries. The question we must determine is whether the transactions between the Appliance Co. and petitioner created debts, as contended by respondent, or amounted to a loss in the nature of theft by deceit and artifice, as contended by the petitioner. No contention is made by petitioner that its funds were embezzled.

Respondent concedes that petitioner is entitled to a…