2187878 Nova Scotia Limited v. The Queen, 2007 DTC 761, 2007 TCC 249 -- summary under Timing

The portion of a large write-down that the taxpayer was able to verify as representing overstatements of income or understatements of expenses that had been fraudulently recorded by a controller (but without pocketing any of the misstated items) of the taxpayer who subsequently was fired was permitted as a deduction in the year of the write-down given that it was not possible for the taxpayer to determine which particular previous years the overstatements related to and given that disallowing the deduction in that year of the expense would be tantamount to requiring the taxpayer to pay tax on phantom income (most of which were statute-barred).