Believe it or not the tax code does have some funny and interesting tax laws. The “other income” items talked about below will either make you laugh or shake your head. The items listed below are taken directly from IRS Publication 17 and are taxable transactions.
Stolen property. If you steal property, you must report its fair market value in your income in the year you steal it unless in the same year, you return it to its rightful owner.
Kickbacks. You must include kickbacks, side commissions, push money, or similar payments you receive in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040), if from your self-employment activity.
Illegal activities. Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity.
Bribes. If you receive a bribe, include it in your income.
Here is the good news to all of the above items, if a taxpayer so chooses to report them, because of your constitutional right to protect oneself from self-incrimination you can just report these items as “other income”. I know criminals everywhere are breathing a sigh of relief after reading that statement. On the other hand, failing to report these items is considered tax evasion and can land them in prison. Like I said in the introduction of this article, some people will laugh and others will shake their head.