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definition of gross income. James v. United States, 366 U.S. 213
(1961) (money obtained from embezzlement); Rutkin v. United
States, supra (money obtained by extortion); Leaf v.
Commissioner, 33 T.C. 1093 (1960) (money diverted from wholly
owned insolvent corporation to defraud corporation’s creditors),
affd. per curiam 295 F.2d 503 (6th Cir. 1961). Generally, a
taxpayer who unlawfully and fraudulently obtains funds is liable
for taxes on the full amount of the funds if the taxpayer
receives the money without the consensual recognition of an
obligation to repay and there is no restriction on the
disposition of the money. James v. United States, supra at 219;
Mais v. Commissioner, 51 T.C. 494, 498-499 (1968); Leaf v.
Commissioner, supra at 1096. The mere possibility that demands
may eventually be made for refunds or that the taxpayer has an
obligation to make requested refunds in a later taxable year does
not relieve the taxpayer of tax on the diverted funds. James v.
United States, supra; United States v. Rosenthal, 470 F.2d 837,
842 (2d Cir. 1972); Leaf v. Commissioner, supra; see also Stovall
v. Commissioner, 762 F.2d 891 (11th Cir. 1985), affg. T.C. Memo.
1983-450; Quinn v. Commissioner, 524 F.2d 617, 625 (7th Cir.
1975), affg. 62 T.C. 223 (1974). However, where repayment is
effected during the same taxable year as the taking, the taxpayer
is not taxed on the amounts repaid. Mais v. Commissioner, supra;
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