Taxes on buried treasure?

[Fermion]

I was reading an article on the (million, multi-million) dollar treasure that was buried recently by an eccentric millionaire somewhere in the Rockies.

So, if someone finds that, how are taxes handled? Is it technically a gift from the millionaire and he would owe gift taxes? Does it fall under some contest tax rules or abandoned property rules?

Just something I thought about that probably didn't cross the minds of 99.991% of the people reading the article.

[soupcxan]

It's taxable.


https://en.wikipedia.org/wiki/Cesarini_v._United_States

[Fermion]

So the finder pays the tax due?

What if I want to give $50,000 to my kid, but I am in a higher tax bracket than they are? It would be cheaper if I buried $60,000 and had them find it via clues and pay $10,000 in tax than if I were to gift them $50,000 and pay $15,000 in tax in my higher bracket. (I have no kids though).

Is the millionaire gifting the treasure to the finder?

from Wikipedia:

A gift tax is a tax imposed on the transfer of ownership of property. The United States Internal Revenue Service says, a gift is "Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return."[1]

[jim584672]

But what if the treasure was $20 gold coins? I would argue the face value of the coin, not the metal value should be reported. After all we have circulating Kennedy Halves with a metal value over face, yet these are still legal tender for $.50.

Just a thought to bake your noodle.

[MooreBonds]

Quote:

Originally Posted by Fermion from Wikipedia: A gift tax is a tax imposed on the transfer of ownership of property. The United States Internal Revenue Service says, a gift is "Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return."[1]

I'm not a tax lawyer, but I would imagine that in the case of the millionaire hiding the treasure in the mountains, it's a case of a 'contest winnings', and the finder/"winner" would owe the money - kind of like winning the lottery or Oprah giving a car away to an audience member.

If you wished to gift a large sum to your child, in order for it to be taxable to your child and not you, I would imagine that there would have to be some complete severance from you, and that your child's free-and-clear ownership of the funds can't occur immediately following you relinquishing ownership of it.

In other words, you would have to set up a contest, whereby anyone could discover and make claim to said treasure, and not likely just your child.

[MooreBonds]

Quote:

Originally Posted by jim584672 But what if the treasure was $20 gold coins? I would argue the face value of the coin, not the metal value should be reported. After all we have circulating Kennedy Halves with a metal value over face, yet these are still legal tender for $.50. Just a thought to bake your noodle.

You could try to declare the value of your discovery at face-value - but that would then establish your cost basis, and you would owe income taxes on the face value of your find. If you later sold those coins for above face-value, the difference would be taxed at (I believe) the 28% Collectibles rate.

Also, if you found gold or old silver coin, I don't know how that would be treated. Didn't the treasury officially call in all metal coinage containing a high level of gold and silver content? If so, it might not be considered "legal tender" anymore and ONLY have the numismatic collectible value - which would be far higher than the face value.

[dallas27]

Why not worry about it after you find it.


Sent from my iPhone using Early Retirement Forum

[soupcxan]

There are large exclusions on the gift tax so it's unlikely you would incur gift taxes by giving money to your hypothetical children. Also there is an unlimited exclusion for qualified educational expense gifts.

[bingybear]

Quote:

Originally Posted by jim584672 But what if the treasure was $20 gold coins? I would argue the face value of the coin, not the metal value should be reported. After all we have circulating Kennedy Halves with a metal value over face, yet these are still legal tender for $.50. Just a thought to bake your noodle.

you would loose if audited. It is the value of the property... not face value.

Others...Is it a gift... is was not given to you. If you go and find an item of worth... like people who use metal detectors look for....the item found is taxable. I think this is like the person who hides their savings buried in a coffee can in the back yard. The next owner of the house finds it. Legally taxable..

now, does everyone report when they find a quarter on the street?

[CaliforniaMan]

Here is a true story. About 30 years ago a little girl found three $20 bills in the sand near where she and her family had been sitting on the beach. There was no one else around or had been, she and her family were there most of the day. Who would owe taxes on this?

[skipro33]

In its 2013 tax guide, the Internal Revenue Service states, “If you find and keep property that does not belong to you that has been lost or abandoned (treasure-trove), it is taxable to you at its fair market value in the first year it is your undisputed possession.”

Local to me is this story;

Couple That Found $10 Million in Gold Coins Will Have to Hand Over HOW MUCH in Taxes? | Video | TheBlaze.com

If ever there were any doubt that the government is a bunch of thieves, that statement ought to clear it up. What possible reason could they lay claim to not just found money, but found property and taxing it in dollars.

[bingybear]

Quote:

Originally Posted by CaliforniaMan Here is a true story. About 30 years ago a little girl found three $20 bills in the sand near where she and her family had been sitting on the beach. There was no one else around or had been, she and her family were there most of the day. Who would owe taxes on this?

I don't know the tax rules 30 years ago, but likely the little girl. If that was her only taxable income, she likely would owe nothing. I'm not sure if there was any kiddie tax laws back then. A kiddie tax could have put it on the parents.

[hurricane harry]

Quote:

Originally Posted by CaliforniaMan Here is a true story. About 30 years ago a little girl found three $20 bills in the sand near where she and her family had been sitting on the beach. There was no one else around or had been, she and her family were there most of the day. Who would owe taxes on this?

no one