Federal Tax Research 10th Edition by Steven Gill, Gerald Whittenburg, Roby Sawyers, Debra Sanders, William Raabe

Exercise 56

Con man Floyd sold Larry the Library of Congress for $150,000. Since Larry did not have that kind of money, he embezzled the $150,000 from his employer to make the purchase.
a. How much gross income should Larry and Floyd report as a result of this event
b. For tax purposes, how will Larry treat any repayment of the embezzlement to his (former) employer