You must pay tax on what you have stolen
Well, this is interesting. The IRS here says that: "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." (See page 90 under ""Stolen Property."
I wonder what implications this has for the tax returns of, for example, Members of Congress.
(Thanks Digg)
Comments (12)
Stephan Kinsella
This is interesting because (a) it shows that the federal income tax can be used to effectively make private state crime a federal crime, even when the feds are not empowered to criminalize that activity; and (b) it presupposes that the thief has legal title to the property he has stolen, which he does not.
I've also often wondered why bigamy can be a crime. After all, the state is granting the second marriage license/status. The crime is *applying* for the second marriage, apparently. Why doesn't the state simply declear all second marriages null and void, that is, not grant that status, so that bigamy is literally impossible?
Published: January 5, 2007 3:58 PM
Adam Dada
Check Page 89...
Illegal income. Illegal income, 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.
Published: January 5, 2007 5:00 PM
Lucas
Not only must you report the FMV of the stolen oblect, but if you sell it and realize a gain you have to pay tax on the amount of the gain.
Published: January 5, 2007 8:36 PM
David C
If you must pay taxes on what you stole, then how come all the congress and the IRS employees don't owe over a billion dollars each?
Published: January 5, 2007 9:22 PM
Timothy
If you are caught, and the property returned to its rightful owner, does the government refund whatever tax you paid?
Also, can the expenses incurred during criminal activity, including defense lawyers, count as expenses for tax purposes?
There was a case in Australia where a drug trader claimed a tax write off on $200,000 or so of merchandise stolen during a drug deal - the courts upheld his write to claim it as a deduction, much to the dislike of the tax authorities. I agreed with the courts in this instance.
Published: January 6, 2007 3:44 AM
Brad
Tax evasion and mail fraud, the two things that piss off the government most. Actually stealing something is the lesser evil. If we catch them and you are made whole, well fine, if not, oh well, BUT WE'RE GUNNA GET OUR CUT OF THE ACTION.
It gets harder and harder to consider that the State is simply not the biggest thugs of all.
Published: January 6, 2007 11:46 AM
DavidB
wow! I never thought they had a provision in the tax act to force the banks to pay taxes. Now they do under that 'stolen property' clause. That's great! I guess it would apply to the fed too huh?
Fantastic!
Published: January 6, 2007 9:45 PM
Russ R
I guess you're allowed to "Plead the Fifth" on your return, right?
Published: January 6, 2007 9:50 PM
DavidB
Apologies for the P.S. here ....BUT....Now that the shock and laughter are wearing off I am realizing that someone had to actually write that out and put it there in the tax act.
Someone had to think for *at least* a few seconds before applying that little bit of genius. Can you imagine what must have been going through that person's mind at that very moment? Surely there was a secretary, a copywriter or even a proofreader along the lines SOMEWHERE in the government process who could have given the Einstein behind that idea at least one slap upside the head. Could any of those robots have lost their jobs for reacting in such a way to such madness?
That has got to be one of the single most dumb things I have EVER seen government do and I have seen a lot(and read a lot more) in my 40 short years on this dumb planet
Published: January 6, 2007 9:57 PM
Peter
Is this really coming as a surprise? Remember Al Capone?
Published: January 6, 2007 11:21 PM
Michael A. Clem
One wonders if this isn't really a law enforcement issue, as Peter and Stephan suggest, as opposed to the bureaucratic stupidity and greed of the IRS? For example the purpose of the tax stamp law on illegal drugs was to be able to pump up the charges against drug dealers, not to collect more tax money. This, too, might be a way to trump up criminal charges.
The trouble with such laws is that the law itself is often morally flawed and inconsistently applied. They only use it if they can't convict someone of regular, criminal charges. Thus, these laws are not merely silly, but dangerous.
Published: January 7, 2007 11:59 AM
Matt
So if you have something stolen from you, can you deduct it from your income taxes? If not, a den of thieves could face the prospect of over 100% taxation.
Published: January 8, 2007 8:28 AM