ownership interest in the money and with the expectation that the defendants would make active use of those funds. Since the defendants had an ownership interest and the real authority to use the money as owners, holding them guilty of embezzlement might plausibly be construed as violating the common-law doctrine that one may not steal from himself.

The cases and other materials relied upon in Cravens indicate that the general rule that partners cannot embezzle partnership property has been limited in practice in a number of ways: no partnership was found in People v. Foss, 7 Cal. 2d 669, 62 P. 2d 372 (1936) (member-officer of association held to have acted as agent), and People v. Hotz, 85 Cal. App. 450, 259 Pac. 506 (Ct. App., 2d Dist., 1927) (defendant, who was to share equally in profits, held to have acted as agent), and the other authorities cited all indicate that a taking prior to fulfillment of conditions of a conditional executory partnership agreement can be an embezzlement and that a taking by a partner entrusted with winding up a partnership business after liquidation can be an embezzlement. 17 A.L.R. 985; 31 L.R.A. (N.S.), 823; 29 C.J.S., Embezzlement, sec 16, p. 693; 20 C.J., Embezzlement, sec. 35, p. 445.

The latest version of the American Law Institute's Model Penal Code provides, at section 206.11 (1) thereof (Tent. Draft No. 2, p. 100 (1954), renumbered sec. 222.11 (1) at Tent. Draft No. 11, p. 4 (1960)) that:

(1) Generally. It is no defense to a charge of theft that the actor is an owner or co-owner of the property or has any other interest therein, if the person deprived also has an interest to which the actor is not entitled [with exceptions not here relevant].

The American Law Institute's comment on this section is as follows:

1. Co-ownership Generally.

Subsection (1) removes any doubt as to the liability of a partner or tenantin-common or co-owner of a joint bank account for stealing from the other parties who share an interest in the same property. At common law, and still in some states, convictions are prevented by the conception that each of joint owners has complete title to the jointly owned property, so that he cannot misappropriate what already belongs to him. Whatever the merits of such notions in the civil law, it is clear that they have no relevance to the criminal law's effort to deter deprivations of other people's economic interests.

Modern legislation has moved towards the position taken in the text, either by expanding the classes of persons who may be guilty of embezzlement, or by general provisions comparable to that of the text.

We note that apparent absence of California cases directly on point; the apparent rationale of somewhat analogous California cases; existing limitation on the doctrine that one who has an interest in property cannot embezzle that property; and the persuasive reasoning of the American Law Institute. Although the issue is not free from

doubt, on the basis of the California statutes and decisions as we find them and in the absence of any clear authoritative statements of California law to the contrary, we conclude that California courts would not exonerate Kathryn on these facts on the ground that she was a joint owner of all the funds in the joint bank account.

In Grover Tyler, 13 T.C. 186 (1949), this Court disallowed as a theft loss deduction the value of Government bonds taken by petitioner's estranged wife when she left him. The bonds were registered as follows: "Grover Tyler [address] or Mrs. Alice M. Tyler." The bonds were all bought with his money. We noted that (1) although the petitioner's wife told him of her intention to take the bonds, he made no effort to stop her; (2) he did not institute criminal proceedings against her; (3) he did not attempt to have the bonds canceled and new ones issued; (4) the law generally, and particularly in Ohio (we cited State v. Phillips, 85 Ohio 317, 97 N.E. 976 (1912)), where the takings occurred, did not hold a wife guilty of larceny when she took and converted to her own use her husband's personal property.

Tyler was relied upon also in George Ungar, 18 T.C. 688 (1952), affd. 204 F. 2d 322 (C.A. 2, 1953). The Court of Appeals opinion made it clear that "New York law recognizes the common-law doctrine that a wife who takes her husband's property without his consent does not commit larceny or embezzlement."

The facts and the applicable State law in those cases differ in material respect from the instant case as indicated in the Findings of Fact and Opinion herein. Compare People v. Graff, 59 Cal. App. 706, 211 Pac. 829 (Ct. App., 2d Dist., 1922), where it was held that under California law a wife can be prosecuted for embezzlement of her husband's property. We conclude that petitioner has sufficiently demonstrated Miriam's funds were embezzled by her mother.

Kathryn's expressed intention (see her letter to Miriam, supra) to treat the withdrawn amounts as loans and to repay the "loans" by leaving securities to Miriam does not affect the fraudulent nature of the appropriation (see People v. Talbot, 28 P. 2d 1057, 1061) although it might have been considered in mitigation of punishment had she in fact replaced the amounts withdrawn. Cal. Pen. Code secs. 512, 513. Since there is no dispute that the embezzlement was discovered by Miriam in 1958, it is clear that petitioners are entitled to deduct in 1958 their loss on account of the theft discussed herein. Sec. 165 (e), supra.

On this issue we find for petitioners.

Issue 2.

Petitioners have sought to deduct $7,974 on account of the embezzlement found in Issue 1. On their 1958 Federal income tax return they

arrived at this figure by subtracting the $1,031 remaining in the account at Kathryn's death from "a total of $9,005 standing to taxpayers' credit."

Respondent maintains that if we find an embezzlement loss occurred, we should not allow a deduction greater than $6,403.57. He arrives at this figure by subtracting from the $7,897 withdrawn by Kathryn the $1,493.43 deposited in the joint account in 1950.

We agree with respondent.

Petitioners have submitted no evidence substantiating the $9,005 figure used by them in arriving at the loss. On the other hand, the evidence clearly indicates that Kathryn's withdrawals totaled $7,897 and, since those were the only withdrawals prior to Miriam's withdrawal of the balance, no more than $7,897 could possibly have been embezzled by Kathryn from the joint account.

Although we are convinced that the $6,840.68 with which the joint account was opened came entirely from funds belonging to Miriam, we can find no evidence justifying a conclusion that the 1950 deposit of $1,493.43 also belonged to Miriam. Whatever conclusion we might reach concerning the order in which the deposited funds were withdrawn, it is clear that Miriam's loss could not have included the amount of the 1950 deposit. Consequently, we agree with respondent that Miriam's deductible loss is to be determined by subtracting from Kathryn's total withdrawals the amount of the 1950 deposit.

In order to give effect to these determinations and to the fact that petitioners did not contest certain deficiency items,

Decision will be entered under Rule 50.

ELIZABETH H. BARDWELL, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 86394. Filed April 17, 1962.

1. Held, payments received by petitioner from her divorced husband were includible in her gross income under section 71(a) (1) of the 1954 Code;

2. Held, further, 6-year statute of limitations applicable to 1954 and 1955 under section 6501(e) (1) (A) of the 1954 Code.

Gene W. Reardon, Esq., for the petitioner.

Emory L. Langdon, Esq., for the respondent.

TRAIN, Judge: Respondent determined deficiencies in income tax for the calendar years and in the amounts as follows:

8 As joint tenant with right of survivorship Miriam had access to the funds remaining in the account after her mother's death; she in fact did withdraw those funds; and petitioners have treated the amount so withdrawn as a reduction of the loss sustained by them.

(1) Whether payments received by petitioner from her divorced husband are includible in her gross income under section 71 (a) (1) of the 1954 Code; and

(2) Whether the 6-year statute of limitations is applicable to the taxable years 1954 and 1955.

FINDINGS OF FACT.

Some of the facts have been stipulated and are hereby found as stipulated.

The petitioner, Elizabeth H. Bardwell (hereinafter sometimes referred to as Elizabeth), is an individual residing in Denver, Colorado. She timely filed individual Federal income tax returns for the calendar years 1954 through 1958 with the district director of internal revenue, Denver, Colorado.

Petitioner and Rodney J. Bardwell, Jr. (hereinafter referred to as Rodney), an attorney, were married on May 1, 1926. They lived together continuously as husband and wife until petitioner filed an action for divorce in the District Court in and for the City and County of Denver, Colorado, on August 1, 1952. In her petition for divorce, Elizabeth specifically asked for alimony. Two daughters were born of the marriage, Elizabeth Bardwell Steinmann, who was 21 years of age and married at the time of the filing of the divorce action, and Judith Anne Bardwell, born September 23, 1934.

On August 7, 1952, petitioner and Rodney entered into what was termed a "PROPERTY AND TEMPORARY ALIMONY SETTLEMENT" (hereinafter referred to as the agreement). This agreement listed all the assets petitioner and Rodney owned. All the property that Elizabeth and Rodney acquired, with the exception of a few items of furniture, was acquired with Rodney's earnings or were gifts to him. Rodney's partnership interest in Ivarod Foundation and Southern Agency Co., referred to in the agreement, were gifts from his father and mother. For approximately 2 months prior to the execution of this agreement, there was a period of negotiation between Rodney and Philip Van Cise (hereinafter referred to as Van Cise), petitioner's attorney in the divorce action. Petitioner did not personally participate in these negotiations. The pertinent provisions of the agreement are as follows:

THIS AGREEMENT made this 7th day of August, 1952, Between RODNEY J. BARDWELL, Jr., herein called RODNEY, and ELIZABETH H. BARDWELL, herein called ELIZABETH.

The parties hereto are husband and wife having been married in Denver, Colorado, May 1, 1926, and they have two daughters, Elizabeth Bardwell Steinmann, is 21 years of age and married, and Judith Anne Bardwell who was born September 23, 1934 and is now residing with the parties hereto.

Differences have arisen between them and Elizabeth has sued for a divorce, and it is their desire to settle temporary alimony for 7 months only, and all property rights of every kind in lieu of any permanent alimony, also attorney fees, court costs and support money for Judith Anne.

The property and property interests are as follows:

(a) The parties own the home at 2080 Bellaire Street, Denver, Colorado, where the family are now living, as joint tenants with survivorship, which is free and clear of all liens and encumbrances.

(b) Rodney has two (2) automobiles which are free and clear of encumbrances a 1949 Cadillac, Model 62, four door Sedan, and a 1950 Ford Custom Convertible.

(c) Rodney is an attorney practicing in Denver, and he also owns a one-fourth interest in the Ivarod Foundation, a co-partnership which owns seven apartment buildings in Denver, together with certain personal property, and a onetenth interest in Southern Agency Co., a partnership which owns five apartment buildings in Denver, together with personal property therein.

(d) Rodney has retirement pay of $2,500.00 a year as of this date from the United States Government which is not subject to income tax, and owns stocks and bonds worth about $3,000.00. He also has in his possession stocks purchased by him in the name of Elizabeth, but endorsed in blank by her, which are worth about $9,000.00. Included therein are 100 shares of Massachusetts Investor's Trust worth about $4,000.00 and 25 shares Westinghouse Electric Company worth about $1,000.00.

(e) Elizabeth has about $700.00 in a bank account in her name.

(f) Rodney carries the following thirteen (13) life insurance policies, totaling $60,000.00 :

NOW, THEREFORE, it is hereby agreed between the parties:

1. Elizabeth is to occupy the home until September 15, 1952, on which date she is to vacate the same.

2. On or before said date Elizabeth is to convey her interest in said home to Rodney, and he is to pay her $12, 500.00 in cash therefor, or give her a note for that amount due on or before five years with interest at five per cent (5%) per annum, payable in quarterly installments commencing December 15, 1952. 3. Rodney is to deliver to her the 100 shares of Massachusetts Investor's Trust