Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-09-02375/USCOURTS-ca8-09-02375-0/pdf.json

Nature of Suit Code: 870
Nature of Suit: Tax Suits
Cause of Action: 

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United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 09-2375

___________

Cyril C. Anuforo, *

*

Appellant, *

* Appeal from the United States

v. * District Court for the

* District of Minnesota.

Commissioner of Internal Revenue, * 

* 

Appellee. *

__________

Submitted: May 11, 2010

Filed: August 4, 2010

___________

Before RILEY, Chief Judge, JOHN R. GIBSON and MURPHY, Circuit Judges. 

___________

RILEY, Chief Judge.

Cyril C. Anuforo owned two home healthcare companies, Comfort Plus Health

Care, Inc. (Comfort Plus) and U.S. Central Comfort Plus Care Systems, Inc. (U.S.

Central). Anuforo repeatedly failed to file the companies’ tax returns in a timely

manner, and he also failed to make full payment of the employment taxes he withheld

from his employees. As a result, the Internal Revenue Service (IRS) assessed

penalties against Anuforo under 26 U.S.C. § 6672. Anuforo filed an action in the

district court challenging the penalties. The government counterclaimed, seeking to

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reduce the penalties to judgment. The district court1

 granted summary judgment to the

government on Anuforo’s claims and the government’s counterclaims. Anuforo

appeals, and we affirm.

I. BACKGROUND

A. Unpaid Taxes

Anuforo was the sole owner of Comfort Plus and U.S. Central, and Anuforo

was the person responsible for ensuring the companies’ employment taxes were paid. 

Despite this responsibility, Anuforo consistently failed to pay each companies’

employment taxes.2

 At issue in this case are several calendar quarters during which

Comfort Plus and U.S. Central failed to file timely returns and make full payment of

employment taxes. Comfort Plus failed to file timely employment taxes or make any

payment for eight calendar quarters at various times from 1999 through 2003. 

Similarly, U.S. Central failed to make full payment of its employment taxes during

seven calendar quarters at various times from 1999 through 2003. Of these seven

calendar quarters, Anuforo filed all but one return late, and he made no payment at all

for five of the seven quarters. 

Initially, the IRS worked with Anuforo on the delinquencies and short-payment

of taxes. In July 2000, the IRS agreed with Comfort Plus and U.S. Central to address

specific quarters of delinquent or underpaid taxes in 1999 through installment

1

The Honorable John R. Tunheim, United States District Judge for the District

of Minnesota, adopting the reports and recommendations of the Honorable Franklin

L. Noel, United States Magistrate Judge for the District of Minnesota. 

2

These taxes are often referred to as “trust-fund” taxes because an employer

collects them from its employees and holds them in trust for the federal government. 

See Stevens v. United States, 49 F.3d 331, 333 (7th Cir. 1995) (“These are called

‘trust fund taxes’ because the employer is required to segregate them from its other

assets until paying them over to the IRS.”). These employment taxes must be paid

quarterly. 

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agreements. Under these agreements, Anuforo agreed to make installment payments

and to extend the time during which the IRS could assess penalties against him for his

failure to make payments during the specified periods in 1999. The agreements

provided the IRS could assess penalties for these periods until December 31, 2010. 

Both companies defaulted on their agreements with the IRS when, for various

periods in 2000 and 2001, Comfort Plus and U.S. Central failed to file on time and to

pay their tax returns. The IRS repeatedly informed Anuforo he would be in default

if he failed to remain current on the companies’ tax obligations. On March 22, 2002,

the IRS mailed a letter to each company notifying them they were in default. 

On June 4, 2002, Anuforo notified the IRS two of his employees had been

convicted of embezzling funds from his companies, and claimed the embezzlement

was the reason he was unable to pay his tax obligations. One employee admitted to

embezzling approximately $20,000 from both companies from August 15, 1999, until

2001. Anuforo later acknowledged the employee had repaid $21,000 by the second

quarter of 2002. A second employee admitted to taking $50,861.24 from Comfort

Plus from April 27, 2001, until January 18, 2002. This employee was required to pay

restitution in the amount of $165,040.74, but it is unclear from the record if restitution

was made. Comfort Plus’s income tax returns included deductions for fraud loss in

2001, 2002, and 2003. Despite the embezzlement, Comfort Plus and U.S. Central

filed tax returns in 2001 and 2002 acknowledging the companies’ payment of over $1

million in wages and hundreds of thousands of dollars in other expenses. 

On March 1, 2004, and April 8, 2004, the IRS issued certified letters to

Anuforo, proposing penalties for U.S. Central’s and Comfort Plus’s unpaid taxes, and

providing 60 days to appeal the proposed penalties. On May 19, 2004, Anuforo filed

a timely appeal as to Comfort Plus, and an untimely appeal as to U.S. Central. The

IRS Appeals Office sustained the penalties on October 25, 2005. The IRS assessed

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penalties against Anuforo on February 14, 2005, for U.S. Central’s delinquent taxes,

and on December 26, 2005, for Comfort Plus’s delinquent taxes. 

B. Litigation

On April 3, 2007, Anuforo filed a complaint in the district court pertaining to

the Comfort Plus penalties. Anuforo asserted two former employees embezzled from

his companies, causing the companies to become financially distressed and to default

on tax payments. Anuforo asserted he was “not vicariously liable for the criminal

conduct of the fraudulent employees and also not liable for the trust fund recovery

penalties for good cause.” Anuforo further argued the penalties were time barred. 

The magistrate judge liberally construed Anuforo’s complaint as a claim for a refund

for amounts already paid. On November 13, 2007, the IRS Commissioner filed a

motion for summary judgment. 

Anuforo filed an amended complaint on December 21, 2007, clarifying he was

also seeking relief with respect to the U.S. Central penalties. On December 31, 2007,

the government filed an answer and counterclaim asking the district court to reduce

the penalties to judgment. Anuforo answered the government’s counterclaim by

denying he willfully failed to collect or pay employment taxes and denying liability

for the penalties. 

Anuforo filed a motion to compel the testimony of IRS Revenue Officer Jill

Dutcher (Officer Dutcher) and a “Request for Refusal or Continuance of Defendant’s

Motion for Summary Judgment.” The magistrate judge liberally construed Anuforo’s

motions and attached declaration as a Fed. R. Civ. P. 56(f) affidavit.3

 On June 4,

3

Fed. R. Civ. P. 56(f) states, 

If a party opposing the motion shows by affidavit that, for specified

reasons, it cannot present facts essential to justify its opposition, the

court may:

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2008, the magistrate judge held a hearing on the government’s motion for summary

judgment and Anuforo’s motion to compel. The magistrate judge denied Anuforo’s

motion to compel, and recommended the district court grant the government’s motion

for summary judgment. Anuforo timely filed objections to the magistrate judge’s

report and recommendation. The district court overruled Anuforo’s objections,

adopted the magistrate judge’s report and recommendation, granted the government’s

motion for summary judgment as to Anuforo’s claims involving Comfort Plus, and

affirmed the magistrate judge’s denial of Anuforo’s motion to compel. 

The government filed a second motion, seeking summary judgment on its

counterclaims, and as to Anuforo’s requested relief from the U.S. Central penalties. 

On January 14, 2009, the magistrate judge filed a report and recommendation advising

the district court to grant the government’s motion. The district court adopted the

magistrate judge’s report and recommendation, and granted the government’s motion

for summary judgment in its entirety. 

Anuforo appeals the district court’s grants of summary judgment, claiming

(1) the penalties related to Comfort Plus are barred by statute, (2) Anuforo did not act

willfully, (3) there are genuine issues of material fact in dispute, (4) the district court

abused its discretion by denying Anuforo’s motion to compel Officer Dutcher’s

testimony, (5) Officer Dutcher’s statements and partial deposition testimony should

be stricken from the record, (6) the district court erred by improperly weighing the

evidence, (7) Anuforo is improperly being held vicariously liable for the conduct of

his employees, and (8) Anuforo is entitled to a theft-loss deduction to offset the

penalties. 

(1) deny the motion; 

(2) order a continuance to enable affidavits to be obtained,

depositions to be taken, or other discovery to be undertaken; or 

(3) issue any other order.

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II. DISCUSSION

A. Statute Barred Penalties

Anuforo claims the IRS penalties arising out of Comfort Plus are barred

because the government did not comply with statutory requirements. The Internal

Revenue Code (I.R.C.) states any person who is required to collect and pay over trustfund employment taxes, and willfully fails to do so, is liable for a penalty in an

amount equal to the total amount of tax not paid over. See I.R.C. § 6672(a). While

employers generally pay trust-fund employment taxes in quarterly installments, the

employment taxes are deemed to be filed on April 15 of the next calendar year. See

I.R.C. § 6501(b)(2). The Commissioner typically has three years from the date a

taxpayer files a return in which to assess penalties. See I.R.C. § 6501(a). However,

the taxpayer and the Secretary may agree in writing to an extended assessment period. 

See I.R.C. § 6501(c)(4). 

The IRS may not impose a penalty under I.R.C. § 6672(a) unless the Secretary

notifies the taxpayer in writing he is subject to an assessment of such a penalty. See

I.R.C. § 6672(b). Anuforo does not deny he received notice he was subject to

assessments for penalties, or that the IRS made the assessments. Instead, Anuforo

argues the government failed to provide Anuforo with notice and demand after the

assessments were completed. Pursuant to I.R.C. § 6303(a), the IRS is required to give

notice to each person liable for an unpaid tax, stating the amount and demanding

payment, within sixty days after the Commissioner conducts an assessment.

While the government does not concede it failed to give Anuforo notice and

demand under I.R.C. § 6303(a), it argues such notice was not required. The

government acknowledges such notice and demand would be required if the

government proceeded against Anuforo administratively. However, the government

insists “[e]very court of appeals that has addressed the issue has held that notice and

demand is not a prerequisite to the Government’s bringing a civil proceeding to reduce

assessments to judgment.” 

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The government is correct our sister circuits have consistently held notice and

demand is required when the government wishes to proceed administratively, such as

by filing a tax lien under I.R.C. § 6321, or by administrative levy under I.R.C.

§ 6331(a). See, e.g., United States v. Berman, 825 F.2d 1053, 1060 (6th Cir. 1987)

(discussing I.R.C. §§ 6303(a), 6321, and 6331, and emphasizing the necessity of

notice and demand “to protect the taxpayer . . . where the summary powers of the IRS

to collect taxes administratively are concerned”). However, notice and demand are

not required when the government files a civil action because the filing of the action

allows the taxpayer sufficient time to consider and pay any tax that is due before a

judgment or lien can be placed upon his property. See, e.g., Stevens v. United States,

49 F.3d 331, 337 (7th Cir. 1995) (“It is only when the government wants to proceed

administratively, as by filing a tax lien, that notice and demand are required. Their

absence is irrelevant in a refund suit with counterclaim.” (internal citations omitted));

Purcell v. United States, 1 F.3d 932, 941 (9th Cir. 1993) (similar); United States v.

McCallum, 970 F.2d 66, 69-70 (5th Cir. 1992) (holding “failure to give Section

6303(a) notice is not a bar to the government’s bringing a civil action against” a

taxpayer to collect unpaid taxes); United States v. Chila, 871 F.2d 1015, 1018-19

(11th Cir. 1989) (similar); Berman, 825 F.2d at 1060 (similar); cf. Jersey Shore State

Bank v. United States, 479 U.S. 442, 447 (1987). Even if the government did fail to

serve notice and demand of the assessments upon Anuforo, the government may still

bring its counterclaim against Anuforo regarding the Comfort Plus penalties.4

4

In his reply brief Anuforo argued, for the first time, the government failed to

bring its civil suit within the three-year time limit provided in I.R.C. § 6501(a). 

Anuforo misreads this statutory provision. Internal Revenue Code § 6501(a) states,

“no proceeding in court without assessment for the collection of such tax shall be

begun after the expiration of [the three-year assessment] period.” This provision

permits the IRS to file a suit to collect taxes, even without assessment, so long as it

is brought within the three-year assessment period. See Berman, 825 F.2d at 1060

(“[S]ection 6501(a) recognizes that a suit to collect taxes may be brought without

assessment having been made.”). In this case, the IRS completed assessments before

filing suit, and as a result, this statutory provision does not apply. Anuforo does not

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B. Willfulness

Anuforo argues the court does not “have jurisdiction to consider whether

Anuforo is liable under Section 6672(a),” because the IRS failed to show Anuforo

acted willfully. This is an incorrect statement of the law. The district court had

jurisdiction over Anuforo’s claims pursuant to 26 U.S.C. § 7422 and 28 U.S.C.

§ 1346(a)(1), and jurisdiction over the government’s counterclaims under 28 U.S.C.

§§ 1340, 1345, and 26 U.S.C. § 7402(a). We have jurisdiction over this appeal under

28 U.S.C. § 1291. Despite Anuforo’s attempt to frame this issue in terms of

jurisdiction, he is essentially arguing he should not be held liable for penalties under

I.R.C. § 6672(a) because the IRS has not proven Anuforo acted willfully. 

Internal Revenue Code Section 6672 imposes personal liability against any

person in a corporation who is responsible for payment of trust-fund employment

taxes and willfully fails to make payments. Section 6672(a) provides, 

Any person required to collect, truthfully account for, and pay over any

tax imposed by this title who willfully fails to collect such tax, or

truthfully account for and pay over such tax, or willfully attempts in any

manner to evade or defeat any such tax or the payment thereof, shall, in

addition to other penalties provided by law, be liable to a penalty equal

to the total amount of the tax evaded, or not collected, or not accounted

for and paid over.

I.R.C. § 6672(a); see also Slodov v. United States, 436 U.S. 238, 246-50 (1978). “The

responsible person has the burden to show that he did not willfully fail to pay over the

federal employment taxes.” Olsen v. United States, 952 F.2d 236, 239 (8th Cir. 1991).

appeal the district court’s finding the assessments were completed within the threeyear period. 

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In order for nonpayment to be willful, an “evil or fraudulent intent” is not

required. Hartman v. United States, 538 F.2d 1336, 1341 (8th Cir. 1976). “It is

sufficient if the person acts or fails to act consciously and voluntarily and with

knowledge or intent that as a result of his action or inaction trust funds belonging to

the government will not be paid over but will be used for other purposes.” Id. “A

responsible person also acts willfully by proceeding with a ‘reckless disregard of a

known or obvious risk that trust funds may not be remitted to the government.’” 

Olsen, 952 F.2d at 240 (quoting Wood v. United States, 808 F.2d 411, 415 (5th Cir.

1987)). “Evidence that the responsible person had knowledge of payments to other

creditors, including employees, after he was aware of the failure to pay over

withholding taxes is proof of willfulness as a matter of law.” Id. The record in this

case is replete with evidence Anuforo had knowledge of his outstanding trust-fund

employment tax debts, and nevertheless continued to make payments to other

creditors and to employees. As a consequence, Anuforo’s conduct was willful as a

matter of law.

C. Genuine Issues of Material Fact

Anuforo argues the district court erred in granting summary judgment against

him because there are genuine issues of material fact in dispute. Anuforo specifically

argues genuine issues of material fact exist because (1) Anuforo denied the IRS’s

allegations that he owed penalties; (2) Anuforo disputed the amounts of the penalties;

(3) IRS records setting forth the amounts owed conflict with one another; and

(4) Anuforo contested the IRS’s position that no money intended for the payment of

taxes was involved in the embezzlement. “Summary judgment is appropriate when

there are no genuine issues of material fact, and the moving party is entitled to

judgment as a matter of law.” Gander Mtn. Co. v. Cabela’s, Inc., 540 F.3d 827, 831

(8th Cir. 2008) (quoting Bearden v. Int’l Paper Co., 529 F.3d 828, 831 (8th Cir.

2008)). “We review de novo the district court’s grant of summary judgment, viewing

the evidence in the light most favorable to the nonmoving party.” Id.

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Anuforo’s unsupported, self-serving allegations and denials are insufficient to

create a genuine issue of material fact. See id.; Conolly v. Clark, 457 F.3d 872, 876

(8th Cir. 2006). Anuforo is the responsible person who willfully failed to pay over

trust-fund taxes, and as a result, he is subject to penalties under I.R.C. § 6672(a) as

a matter of law. We reject Anuforo’s contention that his bare denial of liability is

sufficient to create a genuine issue of material fact to defeat summary judgment. 

Anuforo’s second and third alleged genuine issues of material fact both involve

the amount of penalty for which Anuforo is liable. The government conducted

assessments of the amounts Anuforo owed. An IRS assessment under I.R.C. § 6672

is presumed to be correct. See Riley v. United States, 118 F.3d 1220, 1221 (8th Cir.

1997). “This presumption applies even if the assessment is based on an estimate, so

long as the method for making the assessment is reasonable and logical.” Ferguson

v. United States, 484 F.3d 1068, 1077 (8th Cir. 2007); see also Dodge v. Comm’r, 981

F.2d 350, 353 (8th Cir. 1992) (“[T]he assessment is intended to be an estimate. It is

expected to be rational, not flawless.”). 

Anuforo attempts to show issues of fact exist by pointing to various documents

listing different figures for the amounts Anuforo owes. First, Anuforo directs us to

a table which allegedly sets forth a different penalty amount than the amount in the

assessment. This table is not part of the record, and we will not consider it. See

Huelsman v. Civil Ctr. Corp., 873 F.2d 1171, 1175 (8th Cir. 1989) (“An appellate

court can properly consider only the record and facts before the district court and thus

only those papers and exhibits filed in the district court can constitute the record on

appeal.”). Anuforo also claims he received two additional documents which provided

different penalty amounts. The first document, dated January 4, 2005, is a proposed

assessment of trust fund recovery penalties, and it included proposed penalties for

three quarters for which penalties were not actually assessed. The second document,

dated October 25, 2005, is a notice from the IRS Appeals Office stating it considered

Anuforo’s protest to the proposed penalties and decided to sustain the proposed

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penalty. The notice further explained the IRS would “assess a Trust Fund Recovery

Penalty as determined by the Area Director.” The fact these two documents suggested

proposed penalties different from the final penalties actually assessed does not create

a genuine issue of material fact as to the amounts now owed under the final

assessments, which Anuforo has not shown are unreasonable, irrational, or illogical.

Anuforo’s fourth alleged issue of material fact involves a disagreement between

Anuforo and the IRS as to whether the companies’ embezzlers took money meant for

the payment of taxes. Only factual disputes “that might affect the outcome of the suit

under the governing law will properly preclude the entry of summary judgment.” 

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). This is not a material

factual dispute because, even if Anuforo’s assertion—that the embezzlers took money

intended for the payment of taxes—was correct, Anuforo would still be liable for the

penalties under I.R.C. § 6672. See Olsen, 952 F.2d at 241 (recognizing the circuit

courts of appeals are divided as to whether a reasonable cause defense may militate

against a finding of willfulness, but noting “[t]his court has held that reasonable cause

is no part of the definition of willfulness”); see also Muck v. United States, 3 F.3d

1378, 1382 (10th Cir. 1993) (noting the circuit split and finding the reasonable cause

defense “appears inconsistent with [the Tenth Circuit’s] insistence that (bad) motive

is not a pertinent inquiry under § 6672”). 

D. Motion to Compel

After the government filed its first motion for summary judgment, Anuforo

filed a motion to compel Officer Dutcher’s deposition testimony.5

 The magistrate

judge liberally construed the motion as a Fed. R. Civ. P. 56(f) affidavit, but denied

Anuforo’s request. Anuforo appealed, and the district court affirmed the denial. 

5

Anuforo later filed a second motion to compel, but he did not appeal the

magistrate judge’s denial of this motion to the district court, and it is not properly on

appeal before this court. 

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Anuforo now challenges the district court’s denial. “We review for an abuse of

discretion the district court’s refusal to allow further discovery prior to ruling on a

motion for summary judgment.” Nord v. Kelly, 520 F.3d 848, 852 (8th Cir. 2008). 

Under Rule 56(f), a party opposing summary judgment may “seek a

continuance and postpone a summary judgment decision,” but “the party opposing

summary judgment is required to file an affidavit with the district court showing what

specific facts further discovery might uncover.” Roark v. City of Hazen, Ark., 189

F.3d 758, 762 (8th Cir. 1999). In this case, Anuforo’s counsel filed an affidavit,

claiming Officer “Dutcher’s testimony [wa]s very material and essential to competent

rebuttal by [Anuforo] of IRS’s Motion for Summary Judgment.” Anuforo did not set

forth “specific facts further discovery might uncover,” or what information further

discovery might reveal. Id. As a result, the district court did not abuse its discretion

in denying Anuforo’s request for further discovery before granting the government’s

motion for summary judgment. 

E. Request to Strike Statements and Deposition Testimony

Anuforo claims the IRS refused to secure Officer Dutcher for a deposition and

should not be allowed to use information provided by Officer Dutcher to support its

motion for summary judgment. Anuforo seeks to have “any information provided by

[Officer] Dutcher, whether declarations or partial testimony,” stricken from the record. 

Anuforo waived this claim by not raising it below. See, e.g., United States v. AlvarezSanchez, 511 U.S. 350, 360 n.5 (1994) (declining to address an argument not raised

below). 

F. Weighing Evidence

Anuforo claims the district court erred by weighing evidence before granting

summary judgment, and by not giving sufficient weight to Anuforo’s Rule 56(f)

affidavit. Anuforo specifically argues the district court’s statement that “[t]he IRS has

presented overwhelming evidence, much of it IRS forms filed and signed by

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[Anuforo] himself, demonstrating Comfort Plus’ failure to pay taxes,” demonstrates

“the Court weighed evidence in the summary judgment record contrary to law.” We

disagree. The district court’s statement merely reflects its finding Anuforo was liable

under I.R.C. § 6672 as a matter of law. The district court did not err in granting the

government’s motion for summary judgment. See Gander Mtn. Co., 540 F.3d at 831

(“[A] properly supported motion for summary judgment is not defeated by selfserving affidavits.”); Conolly, 457 F.3d at 876. 

G. Vicarious Liability

Anuforo claims, by holding him liable for these tax penalties, the government

is holding Anuforo vicariously liable for the criminal conduct of his employees. 

Anuforo’s claims are not supported by the facts. The parties dispute the amount of

money the employees embezzled. One employee admitted to embezzling

approximately $20,000,6

 and the other employee admitted to embezzling nearly

$51,000. While the embezzlement was taking place, however, Anuforo was paying

hundreds of thousands of dollars to creditors other than the IRS. 

During discovery, Anuforo admitted he engaged in a practice of pro-rating the

companies’ limited resources, making some tax payments, and paying other creditors

to enable the companies to “remain in business, with the hope that the companies

would eventually overcome their financial difficulties and pay off completely all tax

liabilities.” Trying to stay in business is not an excuse for willful failure to pay over

taxes. See Olsen, 952 F.2d at 241; Sorenson v. United States, 521 F.2d 325, 328 (9th

Cir. 1975) (“We hold that payment of net wages in circumstances where there are no

available funds in excess of net wages from which to make withholding is a willful

failure to collect and pay over under § 6672.”). 

6

Anuforo acknowledged the employee had repaid $21,000 by the second quarter

of 2002. 

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H. Theft-Loss Deduction

Anuforo argues he is entitled to a theft-loss deduction under I.R.C. § 165(a) to

offset his penalties. Section 165(a) of the Internal Revenue Code states, “There shall

be allowed as a deduction any loss sustained during the taxable year and not

compensated for by insurance or otherwise.” However, Anuforo has not presented

any evidence or applicable law to establish he is entitled to such a deduction. In this

case, the corporations were the taxpayers who sustained a loss from the

embezzlement, not Anuforo. Comfort Plus already sought and obtained fraud loss

deductions in the amount of $132,032 for its 2001 tax return; $5,808 for its 2002 tax

return; and $174 for its 2003 tax return. We therefore find no basis upon which to

grant Anuforo’s requested relief.

III. CONCLUSION

We affirm the judgment of the district court.

______________________________

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