denying a loss deduction under section 165 based on public policy grounds where a taxpayer spent money on a sham counterfeiting scheme
How later courts described this case
- denying a loss deduction under section 165 based on public policy grounds where a taxpayer spent money on a sham counterfeiting scheme
- theft of cash in a scheme to counterfeit U.S. currency treated as a loss item
- Tannenwald , J ., concurring, and Sterrett , J ., dissenting
Written by the judges who cited it.
The opinion
Featherston, J., dissenting: I have joined in Judge Sterrett’s dissenting opinion, but I add that I do not think the facts show that petitioner was a party to any conspiracy to counterfeit United States currency. He and his covictim knew they could not counterfeit currency. The other parties pretended that they could and would use their black box for currency reproduction purposes, but they knew the box could not be so used. Thus, there was no conspiratorial agreement between petitioner and anyone who actually intended to do any counterfeiting. The whole scheme was designed to defraud petitioner of his money, and that is what happened. His intentions may have been evil, but that is no ground for denying him a tax deduction. In my opinion, the case is controlled by Edwards v. Bromberg, 232 F. 2d 107, 111 (C.A. 5, 1956), now deeply imbedded in the tax law and heavily reinforced by the subsequent Supreme Court decisions cited in Judge Sterrett’s dissent. I do not think the Court should decline to follow that precedent.
FORRESTER, Sterrett, and Hall, JJ., agree with this dissent.