Thread: You must pay taxes on...

Found items, stolen items, and illegally made profit. I thought this was rather humorous. Check it out if you don't believe me: Publication 525 (2008), Taxable and Nontaxable Income

Illegal activities. Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity.

Kickbacks. You must include kickbacks, side commissions, push money, or similar payments you receive in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity.

Stolen property. If you steal property, you must report its fair market value in your income in the year you steal it unless in the same year, you return it to its rightful owner.

Personally, were I to steal something, I don't think I'd be reporting it. That's just me though.

Originally Posted by Quick Orange

Found items, stolen items, and illegally made profit. I thought this was rather humorous. Check it out if you don't believe me: Publication 525 (2008), Taxable and Nontaxable Income



Personally, were I to steal something, I don't think I'd be reporting it. That's just me though.

That's how they got Al Capone. They couldn't prove he stole anything (or more accurately, gained his wealth through illegal activities) but they could prove he spent more than he reported on his taxes.

Originally Posted by TexasBob

That's how they got Al Capone. They couldn't prove he stole anything (or more accurately, gained his wealth through illegal activities) but they could prove he spent more than he reported on his taxes.

That is kind of the whole point of those laws. Even if they can't prove wrong doing if they can prove you had the income but didn't pay Uncle Sam they'll get you that way.

I don't really think they need a reason anymore. More and more it seems they can get you for looking at them the wrong way.

Claiming income from illegal activity is like violating the 5th amendment!
Self-incrimination!

Originally Posted by Oglethorpe

Claiming income from illegal activity is like violating the 5th amendment!
Self-incrimination!

Not quite.

You can refuse to answer questions about your income based on 5th amendment rights, just as you can for any other crime, but the government might still prove its case without your self-incriminating evidence, just as they might for any other crime.

Income is income whether its legal or illegal and with a few exceptions its all taxable.

No different if you do a short sale on your house or you get a credit card company to write off some of your debt. That's taxable income and must be reported.