Stolen anything lately? The Internal Revenue Service is telling taxpayers to report anything stolen this year as income on tax returns — unless they return it.  In fact, any income derived from illegal activity must be reported; and we have illegal whiskey to thank for that.
The rule is real and it’s included in the IRS’s 2021 federal income tax guide.

“If you steal property, you must report its fair market value in your income in the year you steal it unless you return it to its rightful owner in the same year,” the guide says.

Add illegal activities to the list too.

The guide says, “income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Schedule 1 (Form 1040), line 8z, or on Schedule C (Form 1040) if from your self-employment activity.”

That rule was added when a South Carolina man, Manly Sullivan, was convicted in 1922 of evading federal taxes on the income he earned through “running illegal whiskey,” according to The Mob Museum.

In the court case United States v. Sullivan, he challenged his conviction on federal charges on the grounds he could not be required to incriminate himself, also known as the Fifth Amendment, by declaring illegal income.

Sullivan’s argument was rejected unanimously.

WDPE