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In Mann, a secretary embezzled money from the taxpayer by forging
checks. The embezzlement portion of the opinion does not deal
with the amount of embezzlement by the secretary at all, only the
proper year of deductibility. The taxpayer in Mann also was the
victim of theft by a business partner. The taxpayer had given a
business partner $10,200 to open a store. The partner did open a
store, but shortly thereafter closed it and absconded with the
remaining capital. Using the Cohan rule, the Court estimated
that $5,000 of the $10,200 had been embezzled and allowed
ordinary loss treatment for that amount. The Court ruled that
the rest of the loss was a capital loss resulting from the
failure of the store. The Court clearly stated: “Neither the
fact that petitioner sustained a loss nor the amount of such loss
is in dispute.” Id. In the light of the lack of credible
evidence to support the conclusion that there was an embezzlement
in any amount, we decline to apply Mann and Cohan in the instant
case.
We find unconvincing petitioner’s contention that any time
more than one check was written to petitioner during any
particular day, there must have been embezzlement. Given
petitioner’s extensive use of cash for business expenses and
commingling of personal funds and expenses with those of BBTS,
petitioner’s bare assertions regarding the number of checks in a
day is insufficient to prove theft.
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