Burke Grain Co. v. Commissioner
United States Board of Tax Appeals
1. Where petitioner, a stock and commodities broker, sustained a loss through embezzlement of margin funds deposited by clients, held the loss was sustained in the year of embezzlement, since the deposits were not trust funds. 2. Proof of the amounts embezzled by testimony of the embezzler, held sufficient without production of petitioner's books. 3. A contribution to petitioner's capital by its principal stockholder, held not compensation for the loss.
1Opinion of the Court
*336OPINION.
Opper:
Petitioner, a corporation engaged in the brokerage business, claims an overpayment on the ground of a loss suffered through embezzlements which, although occurring in the tax year, were not in fact discovered until approximately two years later. Respondent resists the claim upon three principal grounds — first, that the loss was not sustained in the tax year because the funds embezzled were margin deposits made by petitioner’s customers and therefore trust funds, and on the authority of John H. Farish & Co. v. Commissioner, 31 Fed. (2d) 79, and similar cases the loss was not…
2Cases cited2 opinions
- Richardson v. ShawSupreme Court of the United States · 1908
- Stein v. Local Board of ReviewSupreme Court of Iowa · 1907
3Cited by2 opinions
- Burns v. United StatesDistrict Court, N.D. Ohio · 1959
- Burke Grain Co. v. CommissionerUnited States Board of Tax Appeals · 1939