Whose income is it?

"Gene E. Utterback, EA, RFC, ABA" wrote

Actually I don't think it's income at that time, but when it's sold.

Money earned illegally is not necessarily stolen.

Seems it is 50/50 income to both. She might have distracted the doorman, and he snuck in. In the absence of a formal contract, I suppose the income is split evenly between the participants.

You aren't seriously thinking of reporting this income, are you?

Actually that's not true. Illegally obtained money or property is taxable income. If you're caught you can get a deduction or what you have to give back, I believe.

I remember a case years ago where someone managed to steal millions of dollars from a bank toward the end of the year. He was caught the following February and sent to jail.

The IRS sent him a huge bill for taxes on his illegally gotten income. He protested that he didn't get any benefit from it because the authorities recovered the money. He was told that he would have an offsetting deduction the following year.

As others have noted, it depends. Exactly how did your girlfriend manage to get you in? Is it possible she paid for another ticket but didn't want to tell you? Is it possible that someone with the authority to do so allowed her to bring you in?

Another thing striks me, too. Why exactly was it so expensive? Was it a fundraiser? If so, was it for charitable or political purposes? The actual value of what you got may have been minimal in spite of the amount that some paid for tickets.

You received two answers that said it was your income, and one that said half was your income (the latter based only on some kind of default King Solomon-style logic...).

Please don't be like that other guy who keeps on posting a question over and over waiting for a "satisfactory" answer but never says what he finds unsatisfactory with the answer he already got.

-Mark Bole

The value of stolen property is income to the thief. From your facts, that would be your girl friend.

Right on, Mark. I saw lots of reasons to not count it as income at all.

LoTax: Treat it as income to you, report it fully, and pay tax on it. Satisfied?

into a really snooty dinner party in Washington

She paid for her ticket, what stolen goods did she receive? She may have been an accomplice in his theft, but he's still the one who ended up with the stolen "goods" and the taxable income. The value of the free meal/entertainment was never owned by her, not even for an instant.

LoTax is "leading the witness" by stating his girlfriend "managed to steal the value of the ticket". The theft was his. Instead of all the vagary of the OP ("somehow managed to get me in" -- well, I suspect he knows how she managed, but simply isn't telling us), consider the following simplified scenario:

I pay my way into a movie theater, and then proceed to the rear exit door where I know my friend is outside in the parking lot, and I open the door.

a) my friend enters and joins me to watch the movie b) my friend refuses to enter

My actions were identical in both cases, the theft (or lack thereof) was totally determined by the actions of my friend, and benefited only him. My wealth was never increased (let's not confuse criminal culpability with derivation of income).

Or, to use an example closer to home, suppose I am a tax professional who, for non-monetary reasons of my own, help people claim fraudulent tax refunds -- sort of a Dr. Kevorkian of taxes, if you will. I would be subject to civil or criminal fines and penalties, but no way would the illegal income of my clients be somehow construed as my income.

Back to the OP - it would be a different matter if, say, people were standing in line at the entrance of the fancy dinner event, and she pick-pocketed an actual ticket from another person, then turned around and gave it to her boyfriend (instead of scalping it). But that's not what happened.

-Mark Bole

She handed the doorguard her ticket, and by sleight of hand kept it. She then handed the doorguard "OP's" ticket.

Given those facts, it's clear that she sole the meal and gifted it.

Suppose she shoplifted a tie and gave it to him for his birthday. He ended up with the stolen goods, but she has the taxable income.

How do you know? She somehow had two admissions, but only paid for one.

Seth

Or, she used her Jedi powers: "You don't need to see his ticket...this isn't the gate-crasher you are looking for...you can go about your business...". Now all she has to do is go to the audit with him: "You don't need to see receipts ... this isn't the tax evader you are looking for... you can go about your business...". Problem solved.

I gave a similar example in an earlier post -- in my example, he was the one who walked out of the store with the tie, not her. You are taking my comment out of context.

Where was it ever stated that she had two admissions? Let's face it, LoTax isn't telling us how she got him in, which seems to be the crux of the issue -- not enough information. I already said that if she stole an actual ticket, then gave it to him, that would be different.

Whose income do you think it is in the movie theater example I gave, if the friend sneaks in the rear door I have opened? Maybe that's how the girlfriend got LoTax into the dinner. Or, what about the fraudulent tax refunds -- whose income do you think that is?

So, are you answering the original question by saying it is the girlfriend's income?

-Mark Bole

yeah, she invited her boyfriend on the assumption this tactic would work and he could get in. yeah

The OP has never been satisfied with any answer presented, but refuses to provide information as to how two entries were obtained. I think it was a wink and a nod from the host, meaning it was a gift, not a theft.

Given the OP's actions in this thread, I would say we are all done.

In the movie theater example, if the cops or movie theater security guards managed to find out the ticket, they would question him and learn that she was an accomplice. They would then both be kicked out of the movie theater, or both be charged. That's why I said the income is 50/50.

Maybe the OP doesn't want to give too much info on the internet. If it's a wink and nod from the host, it's still likely income in my opinion because this is a commercial enterprise. If the owner of a restaurant eats there for free, that's still income to him. Maybe they get away with it in the real world, but it's still income.

Even commercial enterprises can make gifts. In that case it would seem to me to be a discount, not taxable income. Do you claim taxable income whenever you get 10% off on something when you're shopping?

How is that income? If he's the owner, he's eating his own food. When you make yourself dinner, you don't have taxable income.

I'm pointing out that the fact that he ended up with the stolen goods is not determinative as to whose income was involved.

It wasn't. I'm offering an alternative scenario, still consistent with the original posting, to show that the answer to the question can't be determined from the information given.

I agree.

It could be either, and I don't believe either could win against an IRS claim.

No, I'm saying we have insufficient information.

Seth

OK, the 10% of the never-written check that covers the cost of the food isn't income.

But when your business pays someone else to make your dinner, that payment is either not deductible to the business, or taxable to you.

Seth

it is deductible and not income if it is for the convenience of the business.