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+ The Future of Transportation Taxes + Digital Services Taxes + Understanding Tariffs Tax Foundation Events [down-caret] + State Tax Policy Boot Camp + Talking Tax Webinars * Tax Basics [down-caret] Tax Glossary [down-caret] + Individual Income Tax + Corporate Income Tax + Property Tax + Sales Tax + Excise Tax + Tariffs + Tax Refund + Full Expensing + Child Tax Credit (CTC) + See More Tax Policy 101 [down-caret] + The Three Basic Tax Types + Taxes: The Price We Pay for Government + Not All Taxes Are Created Equal + Common Tax Questions, Answered + The Weird Way Taxes Impact Behavior + 10 Common Tax Myths, Debunked * About Us [down-caret] Our Impact Principles Staff Board Financials Media Careers Internships Webinars/Events Contact Subscribe Donate * Facebook Logo * Twitter Logo * LinkedIn Logo * YouTube Logo * Podcast Logo [tf-logo-lo] IRS Guidance for Thieves, Drug Dealers, and Corrupt Officials June 9, 2014 Alan Cole Alan Cole IRS Publication 17, which helps taxpayers determine how to report their income, is extremely detailed. Its section on "Other Income" has some of the most fascinating sorts of income you are obligated to report. Here are three that stand out: Bribes. If you receive a bribe, include it in your income. Illegal activities. Income from illegal activities, 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. 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. As you can see, Publication 17 is very helpful to a variety of villains and dishonest folk. There is some interesting case law on the subject; the Sixteenth Amendment, which allows Congress to levy an income tax, comes into conflict with the Fifth Amendment, which includes a right against self-incrimination. The conclusion of the matter is unsurprising; it would be absurd to exempt criminals from reporting income on their tax forms while asking it of honest workers. However, Fifth Amendment privilege allows one to report illegal income without revealing its precise source. The constitutional questions are tricky, but this is good neutral tax policy from the IRS. In a nice touch, income from stolen property is offset with deductibility of many classes of stolen property. The main concern with these classes of taxable income, obviously, is compliance. Thieves do not make for honest taxpayers. Was this page helpful to you? Yes! No Thank You! The Tax Foundation works hard to provide insightful tax policy analysis. Our work depends on support from members of the public like you. Would you consider contributing to our work? Contribute to the Tax Foundation --------------------------------------------------------------------- Share This Article! Facebook Logo Twitter Logo LinkedIn Logo Send Email Let us know how we can better serve you! We work hard to make our analysis as useful as possible. Would you consider telling us more about how we can do better? Give Us Feedback Twitter Logo Follow Alan Cole --------------------------------------------------------------------- Topics * Center for Federal Tax Policy * Individual Income and Payroll Taxes [tax-basics] Brush up on the Basics Taxes can be complex. Our guide to understanding them isn't. Launch Tax Basics How Does Your State Compare? Explore our weekly state tax maps to see how your state ranks on tax rates, collections, and more. Compare Your State How Does Your Country Compare? Explore our weekly European tax maps to see how countries rank on tax rates, structure, and more. Compare Your Country --------------------------------------------------------------------- Related Articles Evaluating West Virginia Income Tax Repeal Plans Are Excise Taxes on Beverages a Good Substitute for Income Taxes? Congressional Budget Office and Tax Foundation Modeling Show That Some Tax Hikes Are More Damaging Than Others Testimony: Senate Budget Committee Hearing on the Progressivity of the U.S. Tax Code How the CARES Act Shifted the Composition of Tax Expenditures Towards Individuals A Neutral Tax Code Counts Unemployment Compensation as Taxable Income Taxable income is the amount of income subject to tax, after deductions and exemptions. For both individuals and corporations, taxable income differs from--and is less than--gross income. Help us achieve our vision of a world where the tax code doesn't stand in the way of success. Subscribe Contribute About Us The Tax Foundation is the nation's leading independent tax policy nonprofit. 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