Ronald C. Singerman - Page 9

                                        - 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