Sherif S. Abdelhak a.k.a. Samuel A. Abel - Page 11

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          Bank immediately demanded full payment of the loan balance.  In             
          response, AHERF issued a check for $1,516,170.97 from                       
          petitioner’s KEYSOP account to repay the balance of the loan (in            
          addition to using funds from the cashed-out insurance policies).            
          AHERF’s check required signatures by both petitioner and PNC Bank           
          in order to be cashed.  Although it was perhaps not as petitioner           
          would have liked, AHERF did issue payment from his KEYSOP account           
          to discharge petitioner’s debt, conferring a benefit on                     
          petitioner.  Thus, AHERF did not make a conversion of                       
          petitioner’s funds, a requirement to claim a theft loss                     
          deduction.  See Sperzel v. Commissioner, 52 T.C. 320, 328 (1969)            
          (“But the word ‘theft’ extends only to the ‘criminal                        
          appropriation of another's property to the use of the taker.’”              
          quoting Edwards v. Bromburg, 232 F.2d 107, 110 (5th Cir. 1956)).            
               AHERF also structured employee KEYSOP accounts so that it              
          had the right to reclaim any funds in the accounts in event of              
          bankruptcy or insolvency.  AHERF filed a petition for bankruptcy            
          under chapter 11 and reclaimed petitioner’s remaining KEYSOP                
          funds 1 month after petitioner’s termination.  Petitioner                   
          acknowledged and stipulated he knew of AHERF’s rights to reclaim            
          the funds and may not therefore claim a theft loss on those                 
          funds.  We hold that petitioner has failed to prove theft of                









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