If you found gold coins, meteorites or cash stuffed in a piano, the tax man wants a piece
Consider 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 strategy
Lawmakers weigh tax rule 'backslide' for Venmo, PayPal users
IRS 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%.
The 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
Read more on cnbc.com
