From the IRS website here in the section about “Other Income”:
Publication 17 (2021), Your Federal Income Tax
For use in preparing 2021 Returns
Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Schedule 1 (Form 1040), line 8z, or on Schedule C (Form 1040) if from your self-employment activity.
If you steal property, you must report its fair market value in your income in the year you steal it unless you return it to its rightful owner in the same year.
Gee, and all this time I was under the impression that stealing $100K/year was worth a lot more than earning $100K/year because of the tax benefits. Hence, in essence, the IRS was giving tax breaks to thieves, robbers, and drug dealers. Now I find out they have to pay taxes just like all the rest of us*.
Via Tamera @tacsgc.
* Yes, I know about Al Capone going to prison for not paying income taxes. But you don’t hear about it regarding small time criminals.