Contact UsIn recent news, a homeless man stumbled upon a backpack containing $2,400 and about $40,000 in traveler's checks. He then returned the money but has since been the recipient of almost $100,000 in donations due to his selfless deeds. Would he have to pay taxes on those donations? Hypothetically speaking, if he kept the initial bag of money, would he also owe taxes?
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Tax Professional Answers
Kathryn Morgan
He will have no taxes due on the gifts from other people. If any of the folks who gifted money to him made an individual gift of more then $14k the gifter may have to file a gift tax return. If the gentle had not been so selfless and kept the money he found then he would have had to legally pay taxes on it. So his selflessness gets paid back both ways.
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561 weeks ago
James Kronenberg
Kathryn, in my humble opinion, you are "on target" with your advice regarding tax consequences. Of course, the kind, generous "rewards" for a good deed done as gifts to this individual will result in no charitable contribution itemized tax deduction for the payors. Also, as you mentioned, any found "cash" is taxable income since it is viewed as "treasure" subject to federal income tax by the IRS. Not sure the $40K in travelers checks can be legitmately cashed by the "finder" since they would have "losers weepers" person's signature before counter-signing in front of the merchant's cashier. Just some additional thoughts to clarify your advice. Hope you don't mind as you have the "crux" of the matter well in hand !
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561 weeks ago