Thursday March 2, 2023 – As a tax attorney, I am always interested in the unusual. Like the tax implications of catching a record-setting baseball. Or finding a shipwreck with $800 million worth of whiskey.
In 2010, a man named Ross Richardson discovered a the wreak of a passenger ship named the Westmoreland which sank in northern Lake Michigan in 1854. Along with gold valued at about $20 million, the ship contained about 280 barrels of whiskey each contain 200 bottles.
The IRS refers to these items as “Treasure Troves.” A treasure trove is typically defined as a hidden or concealed collection of valuable items that has been discovered by chance. These items are usually old or antique and have been hidden away for a significant amount of time. In some cases, treasure troves may be discovered on a property or in a building that the finder does not own. In other cases, the finder may have been actively searching for treasure using metal detectors or other means.
From a tax perspective, the discovery of a treasure trove can have several different implications. If the finder is not the legal owner of the property where the treasure trove was discovered, they may be required to pay a finder’s fee or royalty to the property owner. This fee may be subject to income tax, depending on the specific circumstances of the discovery.
If the finder is the legal owner of the property where the treasure trove was discovered, the tax implications may be different. In general, treasure troves are considered taxable income under the Internal Revenue Code. This means that the finder may be required to pay income tax on the value of the treasure trove.
The specific tax rate will depend on the finder’s income bracket and the value of the treasure trove. It is important to note that if the finder intends to sell the treasure trove, they will also be required to pay capital gains tax on any profits made from the sale.
As a tax attorney, my advice to anyone who discovers a treasure trove is to consult with a tax professional as soon as possible. Do NOT follow the old adage “Shoot, Shovel, and Shut Up.”
Attorney Steven A. Leahy explores the depths of the Treasure Trove Tax on Today’s Tax Talk.
Steven A. Leahy is a tax attorney in Illinois. He was the host of the long-running popular Radio Show “The IRS Radio Hour” heard every Sunday evening on AM 560 The Answer. Attorney Leahy is also the author of the book “Deal With Your IRS Problems Today!” You can get a FREE copy of this important book at FreeIRSBook.com. Or Call 24/7 (312)664-6649