TAXATION-FEDERAL INCOME TAX-PERIOD FOR DEDUCTION OF EMBEZZLEMENT LOSSES

This action was brought against the United States for a refund of income taxes paid. Plaintiff taxpayer claimed she was entitled to a deduction in 1941 for losses resulting from the embezzlement of funds by a trustee which were discovered in that year. The Commissioner of Internal Revenue disallowed the claimed deduction because the acts constituting the embezzlement had taken place during prior years. Held, judgment for defendant.

Embezzlement losses are deductible in the years in which the defalcations take place, not in the years such defalcations are discovered. Alison v. United States, (D.C. Pa. 1951) 97 F. Supp. 959.