Yes, found money is definitely taxable income. The court explained that the law defines 'income' very broadly to include money from almost any source, including surprise finds. The couple had to pay taxes for the year 1964, which is when they actually found the money, not 1957, when they bought the piano. This is because 1964 was the year they gained full control of the cash.

Yes, the $4,467 in cash the Cesarinis found in the second-hand piano counts as taxable income because it was an unexpected windfall for them. They have to pay regular income taxes on it in the year they actually got to keep the money, which was 1964, not the year they bought the piano. The court agreed with the decision of the judge who first heard the case, saying that judge applied the law correctly to the facts everyone agreed on. The court didn't accept the Cesarinis' arguments that the money shouldn't be taxed at all, that it should be taxed in the year they bought the piano, or that it should be taxed at a lower rate. When someone finds valuable property they weren't expecting, it counts as regular income and is taxed in the year the person gets to keep it, not the year they got the property the item was found in.

<?xml version="1.0" encoding="utf-8"?>
<opinion type="majority">
<author id="b871-15">
 PER CURIAM.
 </author>

 Plaintiffs appeal from a judgment of the District Court for the Northern District of Ohio, Western Division, which denied their claim for the recovery of income tax paid in the year 1964. In that year the plaintiffs, husband and wife, paid the sum of $836.51 as the income tax due on currency in the amount of $4,467 found by them in a second-hand piano which they had purchased in the year 1957 for the sum of $15.00. Upon denial of their claim for refund, they began this suit. The facts were stipulated and are recited in the opinion of Honorable Don J. Young, reported as Cesarini v. United States, 296 F.Supp. 3 (N.D.Ohio, W.D., 1969), as follows:
 
<blockquote id="b871-18">
 “In 1957, the plaintiffs purchased a used piano at an auction sale for approximately $15.00, and the piano was used by their daughter for piano lessons. In 1964, while cleaning the piano, plaintiffs discovered the sum of $4,467.00 in old currency, and since have retained the piano instead of discarding it as previously planned. Being unable to ascertain who put the money there, plaintiffs exchanged the old currency for new at a bank, and reported the sum of $4,467.00 on their 1964 joint income tax return as ordinary-income from other sources. On October 18, 1965, plaintiffs filed an amended return with the District Director of Internal Revenue in Cleveland, Ohio, this second return eliminating the sum of $4,467.00 from the gross income computation, and requesting a refund in the amount of $836.51, the amount allegedly overpaid as a result of the former inclusion of $4,467.00 in the original return for the calendar year of 1964. On January 18, 1966, the Commissioner of Internal Revenue rejected taxpayers’ refund claim in its entirety, and plaintiffs filed the instant action in March of 1967.” 296 F.Supp. at 4.
 </blockquote>

 We affirm.
 

 Plaintiffs’ contentions here, as in the District Court, are first, that the cash found in the piano was not taxable income; second, that if the cash was taxable income, it became such in the year
 
 *814
 
 1957 when the piano was purchased and the statute of limitations foreclosed the assessment of tax in the year of its being found — 1964; and third, that in all events the tax should be computed at capital gains rate.
 

 The District Judge to whom the case was tried rejected all of these claims. We consider that his opinion, so reported at 296 F.Supp. 3, adequately discusses the facts and correctly applies relevant rules of law. We find no need to supplement it.
 

 Judgment affirmed.
 
</opinion>

Yes, money found inside a previously purchased item constitutes gross income subject to ordinary income tax in the year of discovery. The court affirmed the district court's reasoning, which held that the found money is taxable under the broad definition of gross income in Section 61 of the Internal Revenue Code as 'income from whatever source derived.' The money is properly taxed in 1964, the year of discovery, because that is when the Cesarinis' right to the money was perfected and it was reduced to their undisputed possession. The argument that it should be taxed as a capital gain was rejected because the discovery of money is not a 'sale or exchange' of a capital asset as required for capital gains treatment.

Yes, the $4,467.00 in cash found in the second-hand piano is taxable income to the Cesarinis because it represents a windfall to the finders and should be taxed as ordinary income in the year it was reduced to their undisputed possession, which was 1964. We affirm the judgment of the District Court because Judge Young correctly applied the relevant rules of law to the stipulated facts of the case. The Cesarinis' arguments that the found money was not taxable income at all, that it should have been taxed in 1957 when the piano was purchased, or that it should be taxed at the more favorable capital gains rates were properly rejected by the District Court. Found property that is a windfall to the taxpayer is considered ordinary income and is taxable in the year the taxpayer gains complete dominion over it, not the year in which the property was acquired.

Ermenegildo Cesarini and Mary C. Cesarini v. United States

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