Cesarini v
Cesarini v. U.S., 428 F.2d 812 (6th Cir. 1970)
Issue
In 1964, Ermenegildo and Mary Cesarini discovered money in the sum of $4,467 in a used piano they purchased seven years earlier. In that year they included this money as ordinary income on their tax return, which they paid income tax for. The following year they filed an amended tax return excluding the found money from the gross income, thus creating a refund to the amount they had paid in the initial return. They believe that because they discovered the money seven years after the purchase it is not taxable due to the statute of limitations foreclosing the assessment of tax.
Rule
“The finder of treasure trove is in receipt of taxable income, for Federal income tax purposes, to the extent of its value in United States currency, for the taxable year in which it is reduced to undisputed possession.” Rev. Rul. 61, 1953-1, Cum. Bull. 17.
Analysis
Code Sec. 61: The money found inside the piano was treasure trove and was to be included in their gross income in the taxable year in which it was reduced to their undisputed possession.
Code Sec. 6501: Under the state law in which the taxpayers resided, the money was not reduced to their undisputed possession until its actual discovery in 1964.
Code Sec. 1222: They were not entitled to capital gain treatment for the money they discovered because neither the money or the piano had been exchange or sold.
This information was found within 69-1 USTC 9270
Conclusion
In conclusion, the court deemed the taxpayers’ gross income to have been assessed correctly for their 1964 tax return and they dismissed the taxpayers’ request for a refund for the tax paid that calendar year.
Issue
In 1964, Ermenegildo and Mary Cesarini discovered money in the sum of $4,467 in a used piano they purchased seven years earlier. In that year they included this money as ordinary income on their tax return, which they paid income tax for. The following year they filed an amended tax return excluding the found money from the gross income, thus creating a refund to the amount they had paid in the initial return. They believe that because they discovered the money seven years after the purchase it is not taxable due to the statute of limitations foreclosing the assessment of tax.
Rule
“The finder of treasure trove is in receipt of taxable income, for Federal income tax purposes, to the extent of its value in United States currency, for the taxable year in which it is reduced to undisputed possession.” Rev. Rul. 61, 1953-1, Cum. Bull. 17.
Analysis
Code Sec. 61: The money found inside the piano was treasure trove and was to be included in their gross income in the taxable year in which it was reduced to their undisputed possession.
Code Sec. 6501: Under the state law in which the taxpayers resided, the money was not reduced to their undisputed possession until its actual discovery in 1964.
Code Sec. 1222: They were not entitled to capital gain treatment for the money they discovered because neither the money or the piano had been exchange or sold.
This information was found within 69-1 USTC 9270
Conclusion
In conclusion, the court deemed the taxpayers’ gross income to have been assessed correctly for their 1964 tax return and they dismissed the taxpayers’ request for a refund for the tax paid that calendar year.