3 ms·

Im not sure if there is anythng special about it. You can take a bribe, get caught and sentenced but that doesn't excuse you from paying taxes. IRS just wants t

• oblio 10y ago
  I think the common expectation is that the illegal income/property will be seized by the state and hopefully returned to its rightful owner. No need to tax anything since the thief won't have anything left at the end.
  • mikeash 10y ago
    The IRS seems to account for that with "unless in the same year, you return it to its rightful owner." I wonder what happens if you steal something, keep it until the next year, and then return it? Do you declare it as income in the year you steal it, and a loss in the year you return it? (Probably not. I'm too lazy to look it up, but I recall another document that explains that, while income from illegal activities is taxable, expenses for illegal activities are not deductible.)