A penny found is a penny taxed
As stands full of baseball fans dream of catching Barry Bonds' record-breaking home run ball, attorney and commentator Conrad Teitell reminds us that finders may be keepers, but Uncle Sam wants his cut.
Uncle Sam
More on Taxes, Commentaries, Sports
TEXT OF COMMENTARY
Scott Jagow: It could happen tonight here in Los Angeles. Barry Bonds could break the all-time home run record. He's just one home run behind Hank Aaron, and the Dodgers are hosting Bonds and the Giants tonight. Can you imagine being in the stands and catching the ball that makes history? Oh, the money that baseball will be worth. Oh, the taxes you'll have to pay on it. Commentator and attorney Conrad Teitell says a fortune that lands in your glove will catch the attention of the taxman.
Conrad Teitell: Guess what! The law taxes all income from whatever source derived unless specifically excluded, for example when it's considered a non-taxable gift.
So, cash found inside a used piano that one taxpayer bought was judged to be taxable income. The same for money found in a chair purchased from Goodwill Industries.
Uncle Sam doesn't have much of a heart.
He's also inconsistent. So when a union official received cash and property at his testimonial dinner, Uncle Sam taxed only part of it, saying that some of the dinner participants made non-taxable gifts to him. But a big chunk was taxable income because many of the dinner participants kicked in for business reasons.
I don't make this stuff up.
Here are two cases of cash, jewelry, furs and more received by unmarried women from married men.
In one case, the tax court upheld the IRS. So the girlfriend had to pay income taxes, supposedly, for services rendered.
In another case, however, the tax court said the presents were not compensation, but were gifts, so the girlfriend didn't have to pay any income tax. Of course, Uncle Sam can go after the married boyfriend for gift taxes. If I were his lawyer, I'd tell him how to reduce the gift tax, by having his wife join in the gift.
Now for the bottom line: When your ship comes in, Uncle Sam may be at the dock and waiting to collect his share. But remember that taxable income is better than no income at all.
Jagow: Conrad Teitell does tax, trust and estate law with Cummings & Lockwood.
