Tax Time to Report Finds as Income

[kcm]

I, as a mechanical contractor have I received 1099 for billing less than $600. It just depends on the company I was doing work for. Some will 1099 for very small amounts. A penny found is as far as I understand is face value and would remain that way unless sold. The rules say it's income when you control it so by that logic you received a penny's worth of wealth.
I would probably not report small income w/o a 1099. It wouldn't match my schedule C.
Like I said if the penny was sold for a bunch and the buyer was a business watch your mail near the end of January.
That being said probably the only time the IRS might take notice is if you're audited. Then the IRS would need to track down the paper work.
I remember a contractor that when we were talking about taxes a question came up on reporting income. I asked him what he did with the 1099's. "I just throw them away" he said. My hunch was he didn't understand taxes (like many I've known) and this was his way of dealing with what he didn't understand.
Also I once was on the phone with the IRS over the rules. I asked the lady for fun if it was against the law to be a poor book keeper.
"No sir it's not!" she declared. Seems she was also frustrated with the rules.
Some talk of how complicated taxes are. Not really unless you have income that's complicated. The rules, believe it or not, are there to be fair as for some income is involved. Depreciation and rule changes help do that.

Everyone has things they excel at. My downfall is paperwork. I can "do" just about anything there is to do, but I have a truly difficult time trying to follow the logic of most paperwork. ...I'm not talking assembly instructions, etc., but paperwork where you have to fill in the blanks, figure out receipts, know what's allowed and what isn't, ...that kind of stuff. Has just always been so much easier to not sweat the small stuff and just do the 1040 EZ.

 

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[piegrande]

How one responds to laws is partly based on how risk averse that person is. Al Capone never died in a shoot-out.l He died of syphilis in prison for tax evasion.

I am very risk averse. I am well aware from my life experience that if in 2017 one husband gets shot by his wife for messing around, it WILL be me. So, I don't do it.

Likewise for tax issues. I was going to recommend buying the Prentice Hall Tax course, but Amazon says it is not available. I do not know if it is no longer published or what the problem is.

Another option is the IRS Pub 17, available for free download from the IRS.

Hvacker is correct. Laws on what you can deduct for expenses on things like treasure hunting are complicated and not intuitive. I think it's rotten that you spend a fortune on TH and yet cannot depreciate and deduct those costs when you do find something. But, that is the way it is.

 

[kcm]

piegrande - PM sent

 

[markmopar]

Remembering something as to why anyone going into business needs to understand book keeping and taxes at least enough to understand them.
A home builder wondered why his bottom line wasn't what he thought it should be.
Seems his book keeper was extorting the business. Not unusual but in this case the book keeper was using disappearing ink on the checks and filling in her name. A little knowledge could have saved him and company a bunch. The paper reported the amount she stole was nearly $100000.over just a few years.

Here's another example: Woman admits increasing her own salary, stealing $1M from company | NJ.com

 

[foiler]

Everything I find was lost. I'm merely waiting for the 'losers' to claim their property. No 'income' here. SOOooooo Sorry.

 

[hvacker]

Piegrande quote:I think it's rotten that you spend a fortune on TH and yet cannot depreciate and deduct those costs when you do find something. But, that is the way it is.

You can deduct expenses if your a business. Like Treasure Hunters Inc. Then the business has to make a profit or it's considered a hobby and is dissolved as a business. Even that can be complicated.
I know of a business that wasn't aware that they needed to show profit or they were out of business. They had just kept writing off expenses w/o a profit and only had 2 years left to find a way to remain a company.
Once I was in court (not with the IRS) and the question of a same year write off I took for a van I bought in 2001 came up. Normally a business depreciates a purchase like a van over time.
It was and probably still is 5 years. Don't hold me to that as I haven't needed to lately.
Anyway after 911 because so many deductions were given to NYC the IRS made an allowance to write off a purchase like my van all in one year. The ruling allowed first year deductions for all kinds of stuff.
I took the deduction. In court the "Expert witness" apparently wasn't aware of this ruling and said I couldn't make that write off.
Yes I can and had my lawyer explained the allowance to him.
The expert either didn't know the ruling or was trying to trip me up.
Just a reason anyone in business might want to know taxes at least enough to tread water.

 

[piegrande]

Unless rules have changed dramatically since I took Tax Law, the IRS can use several tests to shut down dummy businesses. The business has to have a valid business model OR PLAN, something that can possibly return a profit.

For example, if you start a chicken ranch and have chickens and feed them and gather eggs, you may make a profit or not. In that case, the time-out rule will apply.

If you buy a new van and an expensive MD and start taking trips to exotic places, having great fun looking for treasure, but your behavior is such that there is almost no chance of EVER making a profit, or even significant income, there were rules which declared it a dummy business and you would be in hot water. IF THEY NOTICE WHAT YOU ARE DOING!

I worked with a very narcissistic man, many years ago. He was dressed very day like something out of GQ, and exuded conceit.

One day he told us his wife had a business, a valid one. She had bought a new Lincoln Continental a few years earlier and had depreciated it out, which didn't take long. Then she sold it to him at the depreciated value, a real steal.

I questioned it, and he insisted it was legal. IT WAS NOT! Sale of depreciated stuff must be an arm-length transaction. So, if the car was depreciated out to $500 and fair market value was $5000, she had to report the $5000 as the sale price, in other words recapture the difference between depreciated value and fair market value.

It was very tempting to call the fraud reporting hotline. But, I let it go.

The IRS has considerable latitude to declare actions as a fraudulent attempt to evade taxes.

 

[Tom_in_CA]

Ah c'mon guys, let's just all admit it: Not only are we despicable for not paying taxes on our md'ing incomes, but we are also morally ethically despicable for the very nature of our hobby: "capitalizing off other people's misfortunes". That's basically what it amounts to afterall , eh ?

Not to mention the scores of laws you violate to have even found the items to begin with ! (alter, deface, harvest, remove, cultural heritage, and so forth).

I don't know how you guys can sleep at night. Tsk tsk. I highly recommend basket-weaving as a morally responsible hobby. And you can send me all your ill-gotten gain (I accept paypal), and I will absolve your conscience of all guilt.

 

[kcm]

Ah c'mon guys, let's just all admit it: Not only are we despicable for not paying taxes on our md'ing incomes, but we are also morally ethically despicable for the very nature of our hobby: "capitalizing off other people's misfortunes". That's basically what it amounts to afterall , eh ?

Not to mention the scores of laws you violate to have even found the items to begin with ! (alter, deface, harvest, remove, cultural heritage, and so forth).

I don't know how you guys can sleep at night. Tsk tsk. I highly recommend basket-weaving as a morally responsible hobby. And you can send me all your ill-gotten gain (I accept paypal), and I will absolve your conscience of all guilt.

Gee, what does that say about doctors? Lawyers? Rescue personnel?

 

[hvacker]

Ah c'mon guys, let's just all admit it: Not only are we despicable for not paying taxes on our md'ing incomes, but we are also morally ethically despicable for the very nature of our hobby: "capitalizing off other people's misfortunes". That's basically what it amounts to afterall , eh ?

Not to mention the scores of laws you violate to have even found the items to begin with ! (alter, deface, harvest, remove, cultural heritage, and so forth).

I don't know how you guys can sleep at night. Tsk tsk. I highly recommend basket-weaving as a morally responsible hobby. And you can send me all your ill-gotten gain (I accept paypal), and I will absolve your conscience of all guilt.

I suspect you're pointing out the human flaw of overlooking the obvious. Most every occupation takes advantage of another's misfortune. Someone raises food because someone else is hungry etc. So goes the jungle. I eat an animal and I have good fortune. Not so for the animal.
It's a tough planet. Everything eats something. We have vague rules, sometimes laws, that deal with a rather odd rules too. Like we aren't supposed to eat those like ourselves. Population control and Soilent Green not withstanding.
One might argue that the IRS takes food from our families mouths. Predator mentality. Others might like the advantages of taxes.
I really never understood when knowing someone that didn't pay taxes at all, tax revolt types, that didn't mind taking advantage of the of what taxes bring like roads, defense, schools but wouldn't part their end. It's like taxes for all but me.

It's hard to hide money. It's hard to launder money too. At least large amounts. Lots of people want bunches of tax free money no matter how they got it. But what could you do with it and where would you put it? Difficult to spend w/o drawing attention. Like in the inner city locating the drug dealers. Just look for what doesn't belong. Expensive car, gold necklaces etc.
I remember a crooked Sec of State in Ill that had shoe boxes stuffed with money under his bed. Couldn't spend it, or bank it.

 

[Tom_in_CA]

.... Most every occupation takes advantage of another's misfortune. .....

good post hvacker. I guess I should clarify, that we are sometimes looked at (I have actually run into this pscyhology before), as persons who "take advantage of other's misfortunes SUCH THAT THE PERSON WHO LOST THE ITEM can now not seek and retrieve it themselves".

I actually have run into this notion a few times.

One time I answered an CL ad for a person who'd lost a key on the beach (one of those expensive electronic ones that was going to cost her $$ to duplicate). I looked and looked, with her following me around pointing out where to hunt. To no avail, I couldn't find it.

So I said to the lady that this beach gets routinely metal detected by other hobbyists. Hence perhaps someone else had already found it (since a few days had transpired). She asked me: "What will they do if they find the key then?". This question caught me off-guard. I quickly thought to myself : "What do I do with all the keys I find?" So I answered her question honestly and said "They'll probably just throw it away" (that's what we do with our junk eh ?). THE LADY WAS TAKEN BACK IN SHOCK. She was DISGUSTED that someone could be so callous and cruel (she had images of her key being chucked in the trash, with no effort made to find the owner, etc....).

So I quickly had to back-peddle from the statement and point out to her that a lot (most) of the keys we find can have been there for years. With no way to trace owners, etc..... But it was too late. She had an immediate dim view of "selfish greedy md'rs" blah blah (I could tell in her eyes).

Hence, guess what honest line I will not be saying in the future ? Doh !

 

[kcm]

I sure as heck wouldn't simply throw lost keys away, especially newer electronic ones!! I'd take out a local ad and post up flyers in the area it was found and, if nothing ever came of it, would then turn them in to law enforcement.

Now if a key has obviously been lost for a very long time, that's a different story!

 

[Tom_in_CA]

I sure as heck wouldn't simply throw lost keys away, especially newer electronic ones!! I'd take out a local ad and post up flyers in the area it was found and, if nothing ever came of it, would then turn them in to law enforcement. ....

Sheesk, you'd turn in all keys to law enforcement ? We get lots of keys off the beach all the time. I can't imagine the "putting up flyers" and "taking out local ads" and "turning them in to law enforcement" all the time.

And the distinction of fresh loss vs long-time loss is sometimes quite evident . But I can imagine endless fuzzy areas of trying to discern specks of corrosion or dinge to discern "fresh loss vs old loss".

 

[kcm]

Keep in mind how near my closest beach is.

Keys are important, and as mentioned by someone earlier, can be very expensive to replace. Now, if I'm going to go to all the trouble to try and find the owners, I do NOT intend to simply "give" the keys back. If the owners respond, then I would kindly ask for my costs in trying to locate them. If nobody responds, then the keys would go to the authorities; no big deal. It's not like I'd be investing a huge amount of time OR money into it - just trying to do what I would hope someone would do if it were me that lost the keys. ...You remember that from growing up, dontcha Tom? Do unto others as you would have them do unto you? ...Or did you learn to do unto others BEFORE they do it to you!!?!!

As I've mentioned before, we're an hour away from our nearest small town - less than 3,000 people. We're 1.5 hours away from the next largest town, less than 10,000 people. And we're well over 2 hours from the nearest "city", which is Grand Forks, ND - barely over 50,000 people. ....We don't really have to deal with much lost-and-found stuff. Also, it's still pretty easy to try and locate the owner(s) way up here.

 

[hvacker]

I wouldn't bother finding the owner of a key. Most will have duplicates at home anyway. A coded key can be replaced at the car dealer. Granted their in for sticker shock. Maybe better to just buy a new car.
I've got a big ol jar of keys here somewhere.I most likely don't have a lock to fit them.

I had a pair of Weimaraner litter mates once. The male had a fondness for my wife's stuff. One day he took her keys off to the yard. I live in a sand box. Never did find them. My guess keys and rings are the most lost.
I rented a Whites detector from Mama's Minerals to check it out. She asked if I had lost a ring? The look she had said many people rent detectors because of lost rings. Apparently very common.
KCM, I'm glad there are some that will take the extra effort to try to find owners of lost stuff. Probably the advantage of living in a small town.