Maki_shmaki | Istock | Getty ImagesConsider this a public service announcement for all treasure hunters: Uncle Sam wants a piece of your loot.Someone who makes a valuable discovery — whether gold coins, meteorites or even cash — generally owes tax on that haul, which is known as “found” property.The tax is twofold: a levy upon acquisition and, if eventually sold, on the profit.Its taxability is due to a basic premise of tax law: Income is taxable unless the Internal Revenue Code excludes it from taxation or allows for a tax deferral, said Troy Lewis, an associate professor of accounting and tax at Brigham Young University.More from Personal Finance:How to leverage 0% capital gains with this lesser-known tax strategyLawmakers weigh tax rule ‘backslide’ for Venmo, PayPal usersIRS unveils ‘paperless processing initiative’ for taxpayers”Is there a treasure-hunter exclusion?” Lewis said. “No, there’s nothing like that.”As a result, it’s ‘miscellaneous income.'”The haul would therefore be taxed at ordinary-income tax rates. These tax rates (which also apply to income like job wages) are up to 37%.How cash in an old piano established taxationThe taxation of found property has its roots in a court case from the 1960s, according to TurboTax.A married couple — Ermenegildo and Mary Cesarini — bought a used piano in 1957. Seven years later, when cleaning the instrument, they found $4,467 of old currency inside. The couple, who exchanged the currency for new notes at a bank, paid $836 of income tax on the find but later requested a tax refund, claiming it wasn’t taxable income. A federal judge rejected the premise, siding with the IRS in federal court.Valuable discoveries happen more often than you might think.For example, in June, a man found more than 700 Civil War-era gold coins in a Kentucky cornfield, a treasure that may reportedly be worth more than $1 million. In April, after a meteorite landed near the U.S.-Canada border, a museum in Maine offered $25,000 to anyone who found a piece of the rock weighing at least 1 kilogram. In 2020, a Michigan man found $43,000 stuffed in a donated couch.The same tax concept also applies to sports memorabilia — say, catching Derek Jeter’s 3,000-hit ball or Tom Brady’s 600th touchdown pass — or winning a car on a game show.Legal ownership starts the clockThere are some caveats. For one, there may …
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[mwai_chat context=”Let’s have a discussion about this article:nnMaki_shmaki | Istock | Getty ImagesConsider this a public service announcement for all treasure hunters: Uncle Sam wants a piece of your loot.Someone who makes a valuable discovery — whether gold coins, meteorites or even cash — generally owes tax on that haul, which is known as “found” property.The tax is twofold: a levy upon acquisition and, if eventually sold, on the profit.Its taxability is due to a basic premise of tax law: Income is taxable unless the Internal Revenue Code excludes it from taxation or allows for a tax deferral, said Troy Lewis, an associate professor of accounting and tax at Brigham Young University.More from Personal Finance:How to leverage 0% capital gains with this lesser-known tax strategyLawmakers weigh tax rule ‘backslide’ for Venmo, PayPal usersIRS unveils ‘paperless processing initiative’ for taxpayers”Is there a treasure-hunter exclusion?” Lewis said. “No, there’s nothing like that.”As a result, it’s ‘miscellaneous income.'”The haul would therefore be taxed at ordinary-income tax rates. These tax rates (which also apply to income like job wages) are up to 37%.How cash in an old piano established taxationThe taxation of found property has its roots in a court case from the 1960s, according to TurboTax.A married couple — Ermenegildo and Mary Cesarini — bought a used piano in 1957. Seven years later, when cleaning the instrument, they found $4,467 of old currency inside. The couple, who exchanged the currency for new notes at a bank, paid $836 of income tax on the find but later requested a tax refund, claiming it wasn’t taxable income. A federal judge rejected the premise, siding with the IRS in federal court.Valuable discoveries happen more often than you might think.For example, in June, a man found more than 700 Civil War-era gold coins in a Kentucky cornfield, a treasure that may reportedly be worth more than $1 million. In April, after a meteorite landed near the U.S.-Canada border, a museum in Maine offered $25,000 to anyone who found a piece of the rock weighing at least 1 kilogram. In 2020, a Michigan man found $43,000 stuffed in a donated couch.The same tax concept also applies to sports memorabilia — say, catching Derek Jeter’s 3,000-hit ball or Tom Brady’s 600th touchdown pass — or winning a car on a game show.Legal ownership starts the clockThere are some caveats. For one, there may …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]
