Keep this in mind for tax season

From the IRS website here in the section about “Other Income”:

Publication 17 (2021), Your Federal Income Tax
For Individuals

For use in preparing 2021 Returns

Illegal activities.

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.

Stolen property.

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.


4 thoughts on “Keep this in mind for tax season

  1. The people who right the “rules” the IRS enforces do not and for the most part have never lived in the real world. Expecting .Gov rules and regs to actually make sense is foolhardy….and that’s being charitable.

  2. So does that mean you don’t pay income tax on the value of stolen property unless you are caught and convicted? Wouldn’t the expectation by the IRS that you would otherwise pay taxes on the value of the stolen goods amount to a 5th Amendment infringement in the form of self incrimination? I guess they need to have that regulation in place in the wildly rare event a criminal is actually caught and convicted. Maybe the IRS needs to go after the liberal DAs that are enabling this crime wave as accessories to tax evasion. Wouldn’t that be fun to watch. One wonders if such a criminal is ever arrested even though not prosecuted or convicted could also be subject to civil asset forfeiture for assets that rightfully belong to someone else and would the rightful owner have claim on such assets from the agency that expropriated said assets? Oh the tangled webs we weave when we conspire to deceive!

    • Lovely way to make every state-level theft offense into a federal tax evasion case upon conviction.

      But I’m going to hazard a guess that this part of the regulations will be enforced about as often as the DOJ pursues “Firearm Possession By Prohibited Person” charges in Chicago, or perjury charges for lying on a Form 4473.

      Which is to say: never, unless it advances another agenda, garners good publicity from the right media outlets or can be applied to an enemy of the bureaucracy.

      • Exactly.
        It’s fun watching the pot industry vs. the government.
        They made it legal so they could tax it. Then the legal dealers complain they can’t compete with all the illegal dealers because of taxes. To funny.
        To say nothing of the murder rip-off crews that gained employment. And no way for tax dollars to pay for the crime.
        Results? As predictable as this new IRS edict.
        And all one can do is shake your head in disbelief.

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