- 8 -
Implicit in this element is a relationship of privity between the
perpetrator and the victim. Crowell v. Commissioner, T.C. Memo.
1986-314. In prior cases involving California Penal Code section
484, we established that a taxpayer who purchases corporate stock
on the open market cannot support a claim of theft under
California law because there is no privity between the alleged
corporate defrauder and the taxpayer. Marr v. Commissioner, T.C.
Memo. 1995-250; Crowell v. Commissioner, supra; DeFusco v.
Commissioner, T.C. Memo. 1979-230.
In the present case, petitioner purchased all of his shares
of Ampex stock on the open market. Accordingly, there is no
privity between petitioner and Ampex’s corporate officers for
purposes of section 484 of the California Penal Code. Thus, even
assuming that petitioner can support his allegation that Ampex is
guilty of criminal wrongdoing, petitioner is not entitled to a
theft loss deduction under California law.4
Petitioner, while admitting that he was not a victim of
theft under California Penal Code section 484, argues that he is
entitled to a theft loss deduction based upon a cause of action
against Ampex for fraud or negligent misrepresentation under
California law. Petitioner cites Small v. Fritz Cos., 65 P.3d
1255, 1257 (Cal. 2003), in which the California Supreme Court
held that a shareholder has the right to sue a corporation for
4 We make no finding as to whether Ampex committed any
wrongdoing in this case.
Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011