OtLS

Found Property – finders of previously lost or abandoned assets are taxed on the fair market value of the property once they have undisputed possession [enacted after a couple discovered $4,467 in a used piano that they had purchased for $15].

Stolen Property – income from illegal activities, including drug deals, art heists, bank robbery and even bribes, is taxable [remember Al Capone?].

Kidnapped Children –victims may be claimed as dependents for the purposes of claiming a personal exemption, the child tax credit and qualifying for the head of household status if the child was kidnapped by a non-family member and the child was a qualified dependent before he was snatched.

Age – Rev Rul 2003-72 is an attempt to clarify that a taxpayer reaches the next age on the anniversary of his birthdate; for example, a child born on January 1, 1987, attains the age of 17 on January 1, 2004.

Prizes – Awards that recognize your accomplishments, such as the Nobel and Pulitzer prizes, are taxable unless you donate the proceeds to charity before taking possession.

Whistleblower Awards – IRS issued $104 million award to Bradley Birkenfeld for helping the agency to recover offshore assets [even though Birkenfeld served 2½ in a federal penitentiary for conspiring with his clients – the same taxpayers that he is squealing on – to shelter money in Swiss banks].

Spies – homeowners may exclude up to $250K If single) or $500K (if married) of the capital gain resulting from the sale of a primary residence if they have lived in the home for at least 2 out of the last 5 years prior to the sale; military personnel stationed at least 50 miles from home here or abroad must have lived in their home at least 2 out the last 10 years but intelligence personnel must be stationed overseas.

Airport Sleeping Pods – IRC § 142(c)(2)(A) forbids development of “any lodging facility” when the tax-free bonds used to fund the construction of the venue have not been repaid in full [Anchorage Airport scrapped its plans to construct micro-hotels offering 2- or 3-bunk containers to travel-weary passengers awaiting connecting flights].

Casualty Loss – taxpayer was entitled to deduct roughly $28K for water damage to her home caused by a leaky washing machine hose [but the cost of the $20 hose itself was not deductible since it had deteriorated over time and did not fail due to a “sudden, unexpected or unusual” event].

Nuclear Holocaust – a section of the Internal Revenue Manual entitled “National Emergency Operations” mandates that the IRS must regroup and start to collect taxes within 30 days after a nuclear strike.  The agency would be required to do so even if it required a total overhaul of the corporate hierarchy.

Charitable Contribution – although the taxpayer did not render services to a qualified charitable organization, her out-of-pocket expenses for the care of feral cats was allowed by the Tax Court as unreimbursed volunteer expenses because Fix Our Ferals actively recruited volunteers to foster cats requiring long-term care.

Like-kind Exchanges – male calves exchanged for female calves are not deemed to be of like-kind because male animals are not held for breeding purposes.

Depreciation – MACRS rules stipulate that the useful life if wallpaper is 39 years for paper with permanent adhesive but only 5 years for paper that is strippable.  On the other hand, lighting installed for decorative purposes may be depreciated over a mere 5 years while lighting installed to brighten a room must be depreciated over 39 years.

• Cough drops are taxed as “candy” (MN).
• Cloth diapers are exempt but disposable diapers are taxable (WI).
• Children’s diapers are taxed but adult diapers are exempt (CT).
• Toilet paper should not be taxed (FL)!
• Naturally carbonated water is exempt; artificially carbonated water is taxable (NJ).
• Popcorn is not a “hot food” and therefore exempt from tax.
• Crushed ice is exempt; blocks of ice are taxable (WA).
• Non-essential food-related items are taxed, including napkins, utensils and straws but paper cups are exempt (CO).
• The cost of a personal chef is taxable unless the meal is prepared with raw or undercooked eggs, fish meat or poultry and refrigerated or frozen for consumption at a later time, and cooked prior to consumption to prevent food-borne illness (WA).
• Unpainted pumpkins are exempt; painted pumpkins are taxable as “decorations” (CT).
• A bumper painted before it is attached to a car is taxable (CA).
• The engraving of names on a trophy that has been previously displayed is exempt.
• Body piercing, gutter cleaning and pet grooming is taxable (AR).
• Tailor’s fee is taxable if paid to modify new clothing or the cost of the thread used to embroider a shirt is greater than 10% of the cost of the shirt (CA).

Same Sex Marriage – a man already wed to another man in a state that permits same-sex marriage may wed a woman in North Dakota [but if this individual moves out of state, he may be prosecuted for bigamy in a state that recognizes same-sex marriage].

Sex Reassignment Surgery – is tax deductible [Tax Court held that gender identity disorder is a “disease”; thus, hormone therapy and surgery are necessary medical expenses].

Breast Augmentation Surgery is not tax deductible since it is classified as a “cosmetic” procedure under IRC §213(d)(9)(B).

Declared Legally Dead – an individual whose absence has been continuous and who cannot be located despite genuine efforts for at least 7 years may be declared legally dead in most states [Donald Miller disappeared in 1982 and was declared legally dead when his wife petitioned the court 8 years later so that she could collect her husband’s Social Security benefits; Donald reappeared in 2005 but has been unsuccessful in convincing a court to overturn the death ruling because of 3-year legal limit on such actions and because his wife does not want to pay back the government benefits she previously collected].

Wills – witnesses must sign before the death of the testator.

Brain Dead – California may release state prison inmates who are brain dead or in a coma.

Death Tax – Seattle, WA imposes a $50 tax on those who die within city limits.

Smokey-the-Bear – as per 18 USC §707, it is a crime to appear as Smokey-the-Bear or Woodsy-the-Owl.

Photographs – taking pictures in a national forest is punishable by $1,000 [while the general public is not subject to this fine, journalists are subject to the Wilderness Act of 1964 and may not exploit natural resources for commercial gain].

Raisins – a law left over from WWII allows the government to demand that farmers deposit nearly ½ of their annual crop into a national reserve without payment so that raisins may be sold overseas and promote consumption.

Antarctica – US researchers  living on Ross Island may not exclude wage income under the Foreign Earned Income Exclusion because Antarctica is not a "foreign country" under the sovereignty of a government other than the US or its possessions; it is sovereignless as per the Antarctic Treaty of 1961.

The Amish – members of a recognized religious sect which is conscientiously opposed to the acceptance of the benefits of any private or public insurance which makes payments in the event of death, disability, old-age, retirement or for medical care may opt out of the system and are exempt from FICA taxes.

Prostitutes – no medical expense deduction allowed for amounts paid to prostitutes even if “prescribed” by a doctor as sex therapy.

Children Toys – the excise tax on children’s wooden toy arrows was eliminated with the enactment of the Emergency Economic Stabilization Act of 2008.

Marijuana – although some states have legalized the sale of marijuana, it remains illegal under federal law which means that revenues must be reported in full but business expenses (including the cost of goods sold) may not be deduction on the federal return.

Advertising – the Treasury’s Department of Alcohol and Tobacco Tax and Trade Bureau ordered a micro-brewery in the small CA town of Weed near Mt. Shasta to cease using the company’s bottle clap slogan “Try Legal Weed” because advertising must be truthful, accurate and not misleading.

Alabama – it is illegal to drive barefoot.

California – it is illegal to “cast, toss, kick or roll” any object other than a beach or volleyball between Memorial Day and Labor Day on a Los Angeles County Beach, although you may play water polo “in or over the Pacific Ocean” [penalty for first-time offense is $100 and rises to $200 for 2nd offense, $500 for 3rd infraction]

Connecticut – it is illegal to intentionally interject yourself in the line of fire.  It is also illegal to open a restaurant that does not offer nose-blowing and non-nose-blowing sections.

Georgia – in Atlanta, it is illegal to tie a giraffe to a telephone pole.

Illinois – in Chicago, it is illegal to fish in your pajamas or take a French poodle to the opera.

Kansas – in Derby, it is illegal to screech your tires [penalty up to $500 and/or 30 days jail].

Kentucky – in Fort Thomas, it is illegal for your pet to “molest” a vehicle [penalty up to $500 and impounding by animal control].

Maine – it is illegal to bite your landlord.

Maryland – in Rockville, it is illegal to swear within earshot of other people [penalty up to $100 and/or 90 days jail].

Massachusetts – it is illegal to drive with a gorilla in the backseat of your car.

Michigan in Detroit, it is illegal to tie crocodiles to fire hydrants.

New Jersey – no vanity plates for drivers convicted of a DUI.

New Mexico – you may not claim a dependency exemption for an individual 100 years or older.

New York – in Sag Harbor, it is illegal to take your clothes off in your car [penalty up to $100 and/or 90 days jail].

Nevada – it is illegal to ride a camel on a highway.

North Carolina – it is illegal to use elephants to plow cotton fields.

Ohio  - it is of course illegal to discard trash out of a car window; so beware if the $1 you pass to a panhandler falls to the ground.

Oklahoma – it is illegal to get a fish drunk and make ugly faces at a dog.

Oregon – it is illegal to leave your car door open on the side of traffic “for a period of time longer than necessary to load or unload passengers”.

Pennsylvania – it is illegal to shoot bullfrogs on a Sunday.

South Carolina – taxpayers are eligible for a $50 credit for donating a deer carcass to the needy.

Texas – it is illegal; to put graffiti on someone else’s cow.

Washington – goldfish may ride in city busses in bowls if they keep still.