Yes, the couple has to pay taxes on the money for the year they found it. The tax law defines 'income' very broadly to include money from any source. An official IRS rule says that found 'treasure' is taxable income in the year you find it and get control over it. The court decided that the couple didn't really 'possess' or control the money when they bought the piano because they didn't know it was there. They only gained control in 1964 when they actually found it. Therefore, 1964 is the year they earned the income and had to pay tax on it.

Yes, the Cesarinis have to pay taxes on the money they found in the piano for the year 1964 when they found it. This is because the law says that all money you get, no matter where it comes from, is usually taxable unless there's a special rule saying it isn't. The rules specifically say that treasure you find is taxable in the year you find it. Also, in Ohio where the Cesarinis live, the law says you don't own something hidden in an object until you actually find it. So even though they had the piano since 1957, they didn't 'own' the money until they found it in 1964. Lastly, they can't get a special lower tax rate on this money because they didn't sell or trade anything to get it.

Yes, money found inside a purchased item constitutes gross income for the tax year in which it was found. Section 61(a) of the Internal Revenue Code defines gross income broadly as 'all income from whatever source derived.' Treasury Regulation § 1.61-14(a) explicitly states that treasure trove constitutes gross income for the taxable year in which it is 'reduced to undisputed possession.' Under the applicable state law of Ohio, the plaintiffs obtained possession of the money not when they purchased the piano in 1957, but when they actually discovered the currency in 1964. Therefore, the $4,467.00 was properly included in their gross income for the 1964 tax year. Furthermore, the money is taxable as ordinary income because the plaintiffs did not engage in a 'sale or exchange' of a capital asset, which is a prerequisite for capital gains treatment.

Yes, the money found in the piano is taxable as gross income for the year it was discovered, 1964. I reach this conclusion for several reasons. First, Section 61(a) of the Internal Revenue Code broadly defines gross income to include 'all income from whatever source derived,' unless explicitly excluded. The Supreme Court has consistently interpreted this language as Congress exerting its full taxing power. Second, Treasury Regulation § 1.61-14(a) specifically states that treasure trove constitutes gross income in the year it is reduced to undisputed possession. Third, Revenue Ruling 61-53-1 directly addresses this issue, stating that found money is taxable in the year it is reduced to undisputed possession. Fourth, under Ohio law, which governs when the money was 'reduced to undisputed possession,' the plaintiffs did not have title to the money until they actually discovered it in 1964. Finally, the found money does not qualify for capital gains treatment because there was no sale or exchange of a capital asset as required by Section 1222(3) of the Code.

Cesarini v. United States

Case Podcast

Rule of Law:

The Legal Principle

Facts:

Procedural Posture:

How It Got Here

Issue:

Legal Question at Stake

Opinions:

Majority, Concurrences & Dissents

Analysis:

Why This Case Matters

Gunnerbot