TAXATION-INCOME TAX-EMBEZZLED FUNDS AS INCOME

In the tax year in question, the taxpayer embezzled funds that came into his hands in his capacity as a bookkeeper for a transfer and warehouse company in Reno, Nevada. He lost practically all of this money in various gambling houses. The taxpayer was convicted and sentenced for the crime of embezzlement and was paroled in 1943. The Commissioner determined that the taxpayer was required to report the amount embezzled in 1941 as income received in that year and asserted a tax deficiency. The Tax Court sustained the Commissioner and the circuit court of appeals reversed. Held, the embezzled moneys did not constitute income to the wrongdoer under section 22 (a) of the Internal Revenue Code. Affirmed. Commissioner v. Wilcox, (U.S. 1946) 66 S.Ct. 546