Mazzei v. Commissioner

Raymond Mazzei (plaintiff), a sheet-metal company co-owner, was introduced to a man claiming he could counterfeit money and, believing the process worked, arranged to have $25,000 of company funds copied. At the meeting, the counterfeiter staged a fake police raid and escaped with the money. Mazzei deducted the $25,000 as a theft loss, but the Commissioner of Internal Revenue (defendant) disallowed the deduction and issued a deficiency, which Mazzei challenged in tax court.