If you found a diamond on the street, would you have to pay taxes on it?
August 22, 2007 10:14 AM Subscribe
If you found a diamond on the street, would you have to pay taxes on it?
Not if you didn't tell anybody.
posted by tastybrains at 10:23 AM on August 22, 2007 [3 favorites]
posted by tastybrains at 10:23 AM on August 22, 2007 [3 favorites]
Scratch my inserted [in] above. It reads fine the way it was.
posted by DevilsAdvocate at 10:26 AM on August 22, 2007
posted by DevilsAdvocate at 10:26 AM on August 22, 2007
Actually, whether or not you tell someone doesn't change the fact that you are still legally required to pay taxes on it.
posted by 0xFCAF at 10:36 AM on August 22, 2007
posted by 0xFCAF at 10:36 AM on August 22, 2007
For instance...
While not a diamond, the concept of "finding" something with a demonstrable value still applies. Of course, I'm sure the diamond is far easier to keep below the radar, so to speak.
posted by Thorzdad at 10:48 AM on August 22, 2007
While not a diamond, the concept of "finding" something with a demonstrable value still applies. Of course, I'm sure the diamond is far easier to keep below the radar, so to speak.
posted by Thorzdad at 10:48 AM on August 22, 2007
This is something that has been bothering me, though.
Sure, if you found a diamond and SOLD IT, you'd have to pay taxes on it.
But... if you just find it and keep it, do you have to pay taxes on it?
posted by gregvr at 2:01 PM on August 22, 2007
Sure, if you found a diamond and SOLD IT, you'd have to pay taxes on it.
But... if you just find it and keep it, do you have to pay taxes on it?
posted by gregvr at 2:01 PM on August 22, 2007
I believe the answer is yes based on the fact that the kid who ended up with Barry Bonds' record breaking homerun ball put it up for auction today citing one reason that he could not afford the taxes to keep it. I think it is the same as the diamond example.
When you go to sell the diamond (or baseball) you would only pay taxes on the amount over the estimated fair value you declared when first found. Or you would get a credit if it sold for less than its estimated base value.
posted by JohnnyGunn at 2:21 PM on August 22, 2007
When you go to sell the diamond (or baseball) you would only pay taxes on the amount over the estimated fair value you declared when first found. Or you would get a credit if it sold for less than its estimated base value.
posted by JohnnyGunn at 2:21 PM on August 22, 2007
I believe the answer is yes based on the fact that the kid who ended up with Barry Bonds' record breaking homerun ball put it up for auction today citing one reason that he could not afford the taxes to keep it.
From the articles I read, it seemed like he was basing this assertion on what "several people" told him. He didn't mention that they were accountants or whatever. I could be way off, but I wouldn't be terribly surprised if he was just saying that to justify getting the cash from selling the ball. Would the IRS really have noted his catching the ball, found someone to appraise the item, and tracked him down for taxes? How could anyone really put a value on such an item before it goes to auction anyway? I realize I am probably seriously underestimating the hardassedness of The Man.
Anyway, the value of diamonds is bullshit anyway. They're really not worth very much, but the diamond industry keeps the prices artificially inflated. I wouldn't feel so inclined to get it appraised and go through the hassle of reporting this "income" to the IRS - it's not like you'd make much money if you sold it. The only reason I would bother putting it through the system at all is to report it found because I'd feel bad for the person who lost it. (Though they probably had it insured if it was worth very much.)
posted by catfood at 2:50 PM on August 22, 2007
From the articles I read, it seemed like he was basing this assertion on what "several people" told him. He didn't mention that they were accountants or whatever. I could be way off, but I wouldn't be terribly surprised if he was just saying that to justify getting the cash from selling the ball. Would the IRS really have noted his catching the ball, found someone to appraise the item, and tracked him down for taxes? How could anyone really put a value on such an item before it goes to auction anyway? I realize I am probably seriously underestimating the hardassedness of The Man.
Anyway, the value of diamonds is bullshit anyway. They're really not worth very much, but the diamond industry keeps the prices artificially inflated. I wouldn't feel so inclined to get it appraised and go through the hassle of reporting this "income" to the IRS - it's not like you'd make much money if you sold it. The only reason I would bother putting it through the system at all is to report it found because I'd feel bad for the person who lost it. (Though they probably had it insured if it was worth very much.)
posted by catfood at 2:50 PM on August 22, 2007
How could anyone really put a value on such an item before it goes to auction anyway? I realize I am probably seriously underestimating the hardassedness of The Man.
The IRS can and will value anything. Check out the level of detail they get into for Fair Market Value, Valuation and Appraisals. This comes in handy for them when they want to seize your assets or audit your business for undervaluation.
I'd say if you find a diamond on the street, tell the IRS a bum gave it to you since gifts are not taxable income (otherwise Christmas would really suck).
posted by mattbucher at 3:12 PM on August 22, 2007
The IRS can and will value anything. Check out the level of detail they get into for Fair Market Value, Valuation and Appraisals. This comes in handy for them when they want to seize your assets or audit your business for undervaluation.
I'd say if you find a diamond on the street, tell the IRS a bum gave it to you since gifts are not taxable income (otherwise Christmas would really suck).
posted by mattbucher at 3:12 PM on August 22, 2007
Sort of an intellectual query, really, because, seriously, would anyone really declare as income a found diamond? Please. If you found a hundred dollar bill on the street, would you somehow go through the effort of adding it as your taxable income? Of course not. Same thing.
If its a piece of jewelry, a kind person would at least make an effort to return it if posssible. Otherwise, enjoy it, sell it, do whatever. I assure you that unless the hypothetical diamond is worth thousands-plus (very doubtful-see catfoods comments above) the IRS has better things to do than concern themselves with it.. and so do you.
posted by elendil71 at 3:54 PM on August 22, 2007
If its a piece of jewelry, a kind person would at least make an effort to return it if posssible. Otherwise, enjoy it, sell it, do whatever. I assure you that unless the hypothetical diamond is worth thousands-plus (very doubtful-see catfoods comments above) the IRS has better things to do than concern themselves with it.. and so do you.
posted by elendil71 at 3:54 PM on August 22, 2007
Sure, if you found a diamond and SOLD IT, you'd have to pay taxes on it.
But... if you just find it and keep it, do you have to pay taxes on it?
For the same reason you'd have to pay taxes if someone gifted you a house to live in. You tax certain gifts and found objects based on value, rather than value realized through an actual sale, in order to prevent further criminality and avoidance of lawful tax burdens.
Otherwise, no one would "buy" or "sell" anything. They'd just do it all under the table as "gifts" and other financial gymnastics.
posted by Cool Papa Bell at 4:01 PM on August 22, 2007
But... if you just find it and keep it, do you have to pay taxes on it?
For the same reason you'd have to pay taxes if someone gifted you a house to live in. You tax certain gifts and found objects based on value, rather than value realized through an actual sale, in order to prevent further criminality and avoidance of lawful tax burdens.
Otherwise, no one would "buy" or "sell" anything. They'd just do it all under the table as "gifts" and other financial gymnastics.
posted by Cool Papa Bell at 4:01 PM on August 22, 2007
gifts are not taxable income
Not true in all cases.
Generally, you do not need to file a gift tax return unless you give someone, other than your spouse, money or property worth more than the annual exclusion ($11,000 in 2002, 2003, 2004 and 2005; $12,000 beginning in 2006) for that year. Although a return may be required, no actual gift tax will become payable until the cumulative lifetime taxable gifts exceed the applicable exclusion amount. The donor is primarily responsible for the payment of the Gift Tax.
posted by Cool Papa Bell at 4:03 PM on August 22, 2007
Not true in all cases.
Generally, you do not need to file a gift tax return unless you give someone, other than your spouse, money or property worth more than the annual exclusion ($11,000 in 2002, 2003, 2004 and 2005; $12,000 beginning in 2006) for that year. Although a return may be required, no actual gift tax will become payable until the cumulative lifetime taxable gifts exceed the applicable exclusion amount. The donor is primarily responsible for the payment of the Gift Tax.
posted by Cool Papa Bell at 4:03 PM on August 22, 2007
Isn't the ball a gift from whoever owned it before it got hit into the stands? I mean, they let whoever catches it, keep it; it's not lost and found.
posted by topynate at 4:13 PM on August 22, 2007
posted by topynate at 4:13 PM on August 22, 2007
gifts are not taxable income
Not true in all cases.
No, true in ~all cases. Is it really too much to ask that people read what they're cutting and pasting? The only exception I can find is that recipients can agree to pay the gift tax with some sort of rigamarole.
The recipient of a gift does not pay taxes on it. The giver of the gift will owe gift tax if:
(1) The gift exceeds the annual exclusion
(2) The giver has previously given gifts valued at $1 million over the relevant annual exclusions.
posted by ROU_Xenophobe at 4:42 PM on August 22, 2007
Not true in all cases.
No, true in ~all cases. Is it really too much to ask that people read what they're cutting and pasting? The only exception I can find is that recipients can agree to pay the gift tax with some sort of rigamarole.
The recipient of a gift does not pay taxes on it. The giver of the gift will owe gift tax if:
(1) The gift exceeds the annual exclusion
(2) The giver has previously given gifts valued at $1 million over the relevant annual exclusions.
posted by ROU_Xenophobe at 4:42 PM on August 22, 2007
Sorry to theadjack, but seems similar enough for relevancy.
What if I create a thing of value?
That is, I write a book, draw a picture, code some software. Is that then taxable, even if I don't sell it? Now, does it matter whether or not I've sold such before (that is, there're datapoints for determining the value)?
posted by Netzapper at 7:10 PM on August 22, 2007
What if I create a thing of value?
That is, I write a book, draw a picture, code some software. Is that then taxable, even if I don't sell it? Now, does it matter whether or not I've sold such before (that is, there're datapoints for determining the value)?
posted by Netzapper at 7:10 PM on August 22, 2007
What if I create a thing of value?
That is, I write a book, draw a picture, code some software. Is that then taxable, even if I don't sell it? Now, does it matter whether or not I've sold such before (that is, there're datapoints for determining the value)?
I think that's not taxable if you just keep it. Think about it--that would be too much work for individuals and the IRS to keep track of. We do work for ourselves/our family that we could pay someone else to do all the time.
posted by Many bubbles at 9:35 AM on August 23, 2007
That is, I write a book, draw a picture, code some software. Is that then taxable, even if I don't sell it? Now, does it matter whether or not I've sold such before (that is, there're datapoints for determining the value)?
I think that's not taxable if you just keep it. Think about it--that would be too much work for individuals and the IRS to keep track of. We do work for ourselves/our family that we could pay someone else to do all the time.
posted by Many bubbles at 9:35 AM on August 23, 2007
This seems relatively easy to circumvent by having a lifelong feud with a friend about who actually saw the diamond first, plus it makes a great addition to the story when you gift it to one of your grandkids --
"This is the mythical faflebleffer diamond, which my ancestor paulinsanjuan stumbled upon one inauspicious day in a dark alley behind a Taiwanese curio and salami shop. Unbeknownst to him, the treasure was also spied by one John Smallberries (no relation), who spent every alternate Tuesday for the rest of his days plotting, in vain, ways to recover what he considered to be his rightful property. This is the story of one such attempt, on a rainy Tuesday in April..."
You can probably elide "As a result of these repeated intrusions, my grandfather avoided paying taxes on the disputed property indefinitely.".
posted by Caviar at 11:55 AM on August 24, 2007
"This is the mythical faflebleffer diamond, which my ancestor paulinsanjuan stumbled upon one inauspicious day in a dark alley behind a Taiwanese curio and salami shop. Unbeknownst to him, the treasure was also spied by one John Smallberries (no relation), who spent every alternate Tuesday for the rest of his days plotting, in vain, ways to recover what he considered to be his rightful property. This is the story of one such attempt, on a rainy Tuesday in April..."
You can probably elide "As a result of these repeated intrusions, my grandfather avoided paying taxes on the disputed property indefinitely.".
posted by Caviar at 11:55 AM on August 24, 2007
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posted by DevilsAdvocate at 10:23 AM on August 22, 2007