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B. Whether Embezzlement Actually Occurred
In their answering brief, petitioners claim they were
obligated to their corporations for unpaid corporate employment
taxes; they deny respondent’s argument that the corporate
employment tax funds belonged to petitioners’ corporations.
Respondent argues that even if petitioners owned the corporate
employment tax funds, they have not proven the alleged theft.11
Petitioners argue that the following evidence they
introduced proves theft: (1) The agreed judgment, (2) Mr. Kanz’s
admission of the crime, (3) Ms. Simpson’s analysis, and (4)
petitioners’ claim that they obtained some of Mr. Kanz’s bank
statements and copies of cashier’s checks made payable to Mr.
Kanz that correspond in time and amount with some of the checks
that were allegedly embezzled.
Petitioners bear the burden of proving that theft occurred.
Rule 142(a); Welch v. Helvering, 290 U.S. at 115. For tax
purposes, whether a theft loss has been sustained depends upon
10(...continued)
the legal theory behind their claim that they held the corporate
employment taxes as “trustees”. Inasmuch as petitioners have not
addressed this issue in their briefs, they have conceded any
arguments they could have made; we have no obligation to
speculate what arguments they might have made.
11Respondent has made this alternative argument in response
to petitioners’ argument that their corporations did not own the
corporate employment tax funds. Although we have already decided
that petitioners’ corporations did in fact own the funds for
purposes of taking a theft loss deduction, we shall consider this
issue for purposes of completeness.
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