The Finch Formerly Known As Gold

2 June 2005

Can schizophrenics claim two exemptions?

Back in the day, I did some spring moonlighting for the Block brothers — mostly H., as no one could remember ever even seeing R. — and I remembered that bribes were considered ordinary income, and that gambling losses were deductible only to the extent of the winnings you reported as income. But this provision is new to me:

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.

And is the owner allowed depreciation for the period in which he is deprived of its use? The mind boggles.

(Via Jacqueline Passey.)

Posted at 6:26 AM to Common Cents

Here's another interesting one...

"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."

What intrigues me from a legal standpoint is this --- can the IRS require you to say how you earned the money? It would seem like that if they did, then there would be 5th Amendment (self-incrimination) grounds to contest it.

Posted by: J. M. Branum at 4:42 PM on 5 June 2005

There's no spot on the form to ask for it, but I suspect it would trigger an audit if you just put it down on line 21 and marked it as, say, "drug money".

Then again, one could argue that the entire 1040 is at odds with the 5th Amendment.

Posted by: CGHill at 4:50 PM on 5 June 2005