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    en_gm_t_c's Avatar
    en_gm_t_c is offline Junior Twelever Bronze en_gm_t_c is an unknown quantity at this point
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    Default Taxes (Combined threads)

    IF, and I do mean if, I were to find a token (ahhh) and should I choose to keep the jewel, would I have to pay taxes on it? Stupid question, probably, but I'm just curious. So if there's a tax expert out there, get back at me...

    Jason

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    Hunnytree's Avatar
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    This might help. If you consider this treasure hunt your hobby....then the following might be true. There is also another Form 1099 MISC, and a box on that form, Box 3, is simply for "Other Income"...sweepstakes prizes for example would be reported there. Remember I am only offering the information I found. I am not giving tax advice !!! Sheeesh!

    from: http://www.taxesindepth.com/other-taxable-income.html

    Reporting your miscellaneous taxable income

    Uncommon sources of taxable income are entered together on your tax return under the category of "miscellaneous income". Here is a list of possible earnings you may need to report in this section:

    • Hobby income
    • Gambling winnings
    • Prizes
    • Awards
    • Jury duty fees
    • Trusts and estates execution fees
    • Barter income
    • Election judge's fees

    You'll want to be really careful when you report your miscellaneous taxable income. Any mistakes could cost you dearly, should you get audited, especially if you purposefully fail to include any taxable income on your return.

    IRS tax form 1099-B and your hobby or barter income

    IRS tax form 1099-B records barter income. It is often difficult to distinguish the difference between barter or hobby income and self-employment income.

    For tax purposes, barter income, which is either the exchange of property and services for other property or services or reimbursement for referrals, can be included as other taxable income or as self-employment income. Either way, it is fully taxable.

    Income produced by a hobby is considered other taxable income unless it has consistently been profitable over the past few years. After three years of yielding an income, your hobby is considered a business and you are required to report it as self-employment income.

    Otherwise, include the gross profit your hobby earned under the "miscellaneous taxable income" category. Remember, you may deduct the losses or expenses of your hobby as a miscellaneous itemized tax deduction as long as you report hobby income and pay the required taxes. Hobby losses can be claimed as a deduction up to the amount you are claiming as taxable income.
    One source I found indicated the federal tax on such income is 25 percent. I am sure the state would want to know as well.

    Here is the IRS site for info on Form 1099 MISC,,,,Box 3, Other Income, is explained somewhat here:

    http://www.irs.gov/instructions/i109...02.html#d0e653

    And at the rate some of these hunters are going...should they find a token...they might just be able to claim a "wash", after all. I should say...."Dedicated Hunters" !! Bottom line, if you find a token, see the tax preparer guy - you know the one. That advice I will give.
    "When you created the book, you also created us."

  3. #3
    en_gm_t_c's Avatar
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    Thanks, Hunny...

    That was very helpful info on the tax situation...I still have more, but I should keep my concentration focused on the solutions and less on areas that I have no business worrying about, ya know? I'll cross that bridge later...

    Thanks,

    Jason

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    Milou's Avatar
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    Quote Originally Posted by en_gm_t_c
    Thanks, Hunny...

    That was very helpful info on the tax situation...I still have more, but I should keep my concentration focused on the solutions and less on areas that I have no business worrying about, ya know? I'll cross that bridge later...

    Thanks,

    Jason
    Jason, I agree. We need to concentrate on the book first. However, as many has pointed out here before, I am not sure if anyone on this board could afford to keep e.g. the spider due to the tax situation. That is sad but indeed true.

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    rghsea's Avatar
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    Default Taxes

    Not sure if I am posting in the right location.

    I can finally contribute something of real value.

    This is off the top of my head without any research but generally:

    1) Your tax rate is based on the brackets. You are not taxed on all of your income at whatever bracket you end up in. As an example, if you are in the 28% bracket then only that portion of the taxable income within that bracket is taxed at that rate. This is just to clear up confusion on the bee post.

    2) Tax consequences of the find are much trickier. All tokens have a "fair market value" and a value should you chose cash. Fair market value is what a willing seller and a willing buyer exchange something. FMV is normally the base for which you would include income for such a prize. Here are the problems:

    a) First, you cannot obtain the token for a period of years. Under the doctrine of constructive receipt you can't obtain it so it wouldn't normally wouldn't be taxable until that later time However, finder has the ability to choose cash which, based on the rules, is not deferred. For the bee the value is $22,300, the cash value is $6,690.

    Without researching, it would appear that you would be in constructive receipt of the cash value at the time of redemption which, based on my opinion, would be the taxable amount of $6,690. The quirk is if you chose the token. Two possibilities are a) you are taxable on the fmv of the token discounted for the fact your possession doesn't start immediately or b) you pay tax on the $6,690 currently, have a capital asset and if you sell it in the future then any gain over the $6,690 qualifies as capital gain.

    The amount considered taxable would be on a 1099 issued by ATT. The taxable amount is taxed at your "marginal tax rate".

    All finders should check with your tax advisor for specifics, but there is an issue with valuation due, in large part, of not obtaining the token. Because you can elect to take cash currently, you may be taxed this year although you can't actually obtain the token for two years, the IRS views this as your choice, hence "constructive receipt".

    Good luck and good hunting
    . . . these are the times of dreamy quietude, when beholding the tranquil beauty and brilliancy of the ocean's skin, one forgets the tiger heart that pants beneath it

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    nodon's Avatar
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    Another little quirky twist on this - there should be an matching expense by Treasure Trove Inc. when the recipient recognizes the income. Treasure Trove Inc. wouldn't recognize an expense until the actual asset (cash or jewel) is transferred to the finder.

    I didn't see on the rule page the language of getting cash now vs. jewel later - so either prize shouldn't be taxable until received. In a way, it's similar to a multi-year payout on a lottery winning - the future years aren't taxed until the income is received (which is documented by the issuance of a 1099).

    Not looking to start a tax interpretation war here (cuz I'm coming to this gun fight with a knife)- I think it proves that you should consult a tax advisor.

  7. #7
    cj4
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    Default Claiming it as a hobby

    Hi! This is the first post I've made and well, the first topic I am not lost about! Whew...I'm lost with the token search as it's just a book to my son (and has been for months) but I enjoy hearing about the finds....

    Anyways...a note of caution in terms of listing the hunt as a hobby. If in fact, this is a hobby of yours (not just a trover) that's one thing, but if it is not, you may want to look at it another way. With hobbies, you cannot deduct losses/expenses put into the hobby, which would not help with offsetting the retail value of said jewel.

    If it was listed as a winning, you could offset the losses against the winnings. But, that would require a W2G and I believe the winners are getting 1099misc forms. Having said that, if the individual opted to take the cash instead of the jewel the taxes could be paid to fed/state from the total cash distribution thus aleviating your coming up with the money. That will, however, increase your adjusted gross income and potential taxable income/liability and depending on how much you make a year, could get ugly (but keeping the jewel will also do the same I believe).

    What's my point? If you find a token, contact the IRS for advice and plan to use a CPA (not H&R Block...no offense to anyone intended) to help you work it all out. There are always ways to reduce you earnings through IRA/tax-exempt savings/etc as well as itemized deductions and charitable contributions (if you itemize that is). The short of it, don't worry about the tax matter, worry about the token finding and leave the IRS & CPAs to work the rest out for you!!

    Well, happy hunting to you all. Maybe we'll learn of one being found in Arizona & go to see it after the fact! Final note...this of course was not 'tax advice'...wouldn't want that, let's call it 'friendly help'...

  8. #8
    rghsea's Avatar
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    Default ATT

    I thought was going to donate all proceeds after recovery of expenses to charity. I assume that they have set up a foundation so timing of expense on their side probably isn't relevant. However, even a for profit is able to reserve which is the norm for the casino industry accruing for jackpots before they are awarded.

    The timing of inclusion is unclear. This article helps explain constructive receipt and prizes. http://www.nysscpa.org/cpajournal/20...pt/d025403.htm

    The problem here is that this is not a "qualified prize" as it is not payable as an annuity over a period of at least 10 years. I think that you are taxable in the year of find up to cash value. But that is just my opinion.

    Good luck and good hunting.
    . . . these are the times of dreamy quietude, when beholding the tranquil beauty and brilliancy of the ocean's skin, one forgets the tiger heart that pants beneath it

  9. #9
    bop
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    Default Re: Taxes

    hey what's up jason davis!
    so i guess that settles all disputes: you *are* the man.

    i was absolutely shocked when i heard the news. i was laughing for like ten minutes..then i read about how you were laughing for even longer...what endless amusement! i never heard of the book, and you'd already gone all out and nabbed the gold!

    fun as i'm sure it is, i'm not about to begin a treasure hunt. believe me, i've got *plenty* other codes to crack out..like the T*XC@DE!!! (no obscenities on the forum, right?)

    i just wanted to inform you--particularly because of your interest in studying law--of an interpretation of the law (known as "the 861 evidence") which you can follow through yourself (convoluded as the code may be; and no pretty pictures to keep your mind and eyes open) to discover that *the income tax does not apply to domestic income*.

    it makes for an awful lot of trouble when a code has multiple interpretations: particularly when one of them threatens your very sustenance. what makes the absurd sounding conclusion clear, however, is the historical evidence. the code didn't used to be so convoluted: it was straight-forward how to determine whether one's income was taxable. then it was re-organized and reworded, without changing the legal content, so as to make what is now the standard interpretation *look obvious*.

    of course you need not believe this without having done the appropriate research. check out 861.info if you're interested. you should also know that larken rose, who has not filed with the irs in several years, is known for his unusual tactic of *challenging courts to try him* for not filing--which is (finally) happening. perhaps it is inconceivable, but just IMAGINE if he WINS--this would be truly REVOLUTIONARY!

    my regards to cloyne and especially the old czars, and of course,
    CONGRATULATIONS JASON!!!
    bop.

    ps don't let that maniac liz, or even her chihuahua anywhere near your firefly

    Quote Originally Posted by en_gm_t_c
    IF, and I do mean if, I were to find a token (ahhh) and should I choose to keep the jewel, would I have to pay taxes on it? Stupid question, probably, but I'm just curious. So if there's a tax expert out there, get back at me...

    Jason

  10. #10
    absolutchele is offline Getting the hang of it. Copper absolutchele is an unknown quantity at this point
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    Default The Jewel

    Just an FYI, but no matter which you choose, the Jewel or the cash value, I'm pretty sure that you still have to pay tax on your find. It would be cool to keep the jewel, but I can't afford to pay the tax on it so if I find the token, I'm definitely going for the cash value.

    I once won a trip valued at $4800 and the tax on it was $1200.
    Good luck on your hunt. I wish someone would find the Beetle soon.

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