Search Supreme Court Cases

COMMISSIONER V. WILCOX, 327 U. S. 404 (1946)

U.S. Supreme Court

Commissioner v. Wilcox, 327 U.S. 404 (1946)

Commissioner v. Wilcox

No. 163

Argued January 8, 1946

Decided February 25, 1946

327 U.S. 404


1. Embezzled money does not constitute taxable income to the embezzler under § 22(a) of the Internal Revenue Code, which defines "gross income" as including "gains or profits and income derived from any source whatever." P. 327 U. S. 408.

2. A taxable gain is conditioned upon (1) the presence of a claim of right to the alleged gain and (2) the absence of a definite, unconditional obligation to repay or return that which would otherwise constitute a gain. P. 327 U. S. 408.

3. Where an embezzler receives the embezzled money without any semblance of a bona fide claim of right and remains under an unqualified duty and obligation to repay, the embezzled money does not constitute taxable income. P. 327 U. S. 408.

4. This conclusion is not altered by the fact that the taxpayer dissipated all of the embezzled funds, since the loss or dissipation of embezzled money cannot create taxable income to an embezzler any more than the insolvency or bankruptcy of a borrower causes the loans to be treated as taxable income to the borrower. P. 327 U. S. 409.

5. The fact that a theft or loan may give rise to a deductible loss to the owner of the money does not create taxable income to the embezzler or the borrower. P. 327 U. S. 409.

Page 327 U. S. 405

6. The Tax Court's determination that the embezzled money constituted taxable income to the embezzler involved a clear-cut mistake of law, and the circuit court of appeals was justified in reversing the Tax Court's decision. P. 327 U. S. 410.

148 F.2d 933, affirmed.

The Commissioner of Internal Revenue determined that respondent was required to report as income certain money which he had embezzled, and assessed an income tax deficiency against him. The Tax Court sustained the Commissioner. The circuit court of appeals reversed. 148 F.2d 933. This Court granted certiorari. 326 U.S. 701. Affirmed, p. 327 U. S. 410.

Powered by Justia US Supreme Court Center: COMMISSIONER V. WILCOX, 327 U. S. 404 (1946)

Official Supreme Court caselaw is only found in the print version of the United States Reports. Justia caselaw is provided for general informational purposes only, and may not reflect current legal developments, verdicts or settlements. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or information linked to from this site. Please check official sources.