Wacky IRS Tax Laws
By Justin Gardner | Related entries in MoneySeriously…this is funny. Because if you break the law, you should report it to the IRS…trust them…they won’t say anything.
From AllFinancialMatters:
Bribes. If you receive a bribe, include it in your income.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.
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.
What have you done that you wouldn’t dare report to the our IRS? And If you’ve done something bad, just sign your name as TaxCheater in the comments section.
I didn’t report my jazz hands last year. They cost a fortune, but I will this year…
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December 14th, 2006 at 4:40 pm
Well, I know for a fact that many masseurs and escorts report only a portion, or sometimes none, of their income derived from those professions, especially if they have another source of income, such as a regular job (less likely to be investigated that way). Also bartenders (and probably waiters) often severely underreport their tips.
December 14th, 2006 at 5:00 pm
There is a certain redundancy in the title to this post.
December 14th, 2006 at 8:15 pm
I worked for the Nevada State Welfare Division late 70s – mid 80s. Lotta hookers on welfare back then…. we always “advised” them to report the “side job” income – and provide proof by notes/receipt copies from the johns…. In my 10 years there in and an Ongoing unit and later an Intake unit, I actually had one woman report (presumably) truthfully the amount she made hooking, and provide proof (notes/receipts from johns and jills – she wasn’t “straight up”) about 67% of that income.
First year I was her eligibility caseworker, she remained on welfare, being just under the limit of “real” income for a woman with 2 children. The next year, she wasn’t eligible for further assistance. By that time, it was okay with her: she wrote a book, parlayed her not inconsiderable advance into a mortgage on a 4-plex, and last I heard was doing VERY VERY WELL.
I don’t know if she reported the income to IRS. Wasn’t part of my job function – thankfully.
December 14th, 2006 at 8:16 pm
Dos – same sort of redundancy as “weird cat”?
December 14th, 2006 at 9:44 pm
Vicki – that is a classic & informative tale of sex and taxes. Of course, hooking is legal in Nevada and so that makes it a bit more rational. What we are talking about here is really no different than reverse sin taxes. I kind of respect the “code” in this sence, it is true to the spirit of Section 61 (all income derived”) and it recognizes the reality of human nature. I actually think that unless someone was claiming tens of thousands of dollars from illegal activities, it probably wouldn’t be “reported”, but that doesn’t touch the stupidity of creating evidence against yourself just for the satisifaction of the IRS.
December 14th, 2006 at 9:57 pm
Actually, only a couple of Nevada’s counties still have legal prostitution, Nye and one of the tiny northern counties outside Reno – the name of which escapes me at this point (it’s the one where Mustang – a cathouse community – is the ONLY viable income-producing entity….)
And have to fully agree as regards the “stupidity of creating evidence against yourself just for the satisifaction of the IRS” – fortunately, most people aren’t that dim…. of course, I get to say stuff like that, since I don’t cheat on taxes or do anything else illegal (other than beat the speed limit 5mph or so) – and I’m not being facetious…. I’m still an extremely law-abiding card-carrying member of the establishment, 45 years on…. (oh well – FAR too late now….)
December 15th, 2006 at 12:14 pm
The most famous case involving such statutes is Al Capone. They never could nail him on criminal charges — but they eventually got him on tax evasion for failing to report the proceeds of his criminal activities.
So while it seems wacky, there’s a certain logic to it.
I also don’t think the IRS is allowed to report such filings to criminal authorities. So it’s possible to report your illegal income and not go to jail. All the IRS cares about is that they get “their” money.
December 15th, 2006 at 7:07 pm
IIRC some states have tax-stamp laws for marijuana and other illegal drugs. Buying the stamps doesn’t make the drugs legal, of course, but the aforementioned Al Capone principle still applies. Supposedly the stamps may be purchased anonymously, but I can’t imagine that very many drug dealers actually bother to buy stamps for their drugs.
December 16th, 2006 at 6:11 pm
Well, laugh if you want, but rules like this are how they nailed Al Capone.