Allan Rolnick, CPA
What’s the last thing you want to read about for fun, and why is it taxes? Writing about taxes is easy. Every day, there’s something worth reporting. Someone is always introducing legislation. The IRS is always issuing regulations. The Tax Court is always issuing opinions. Several news outlets, including Bloomberg, Politico, and Law360, publish weekly or even daily roundups. The problem with all of them is that “snoozefest” would be a generous description. Writing something fun about taxes is harder. Fortunately, there’s often something entertainingly tax-related in the current news, like Microsoft getting a 28.9$ billion IRS bill, or a celebrity tax cheat heading off to Club Fed. If not, we can look at the calendar and see what silly holiday we can cover with a tax angle. And every so often, there’s a story so compelling we just have to cover it, even if there’s no obvious tax hook, which brings us to this week’s story. Technology has changed the way most of us do our work. Computers, robots, and videoconferencing have liberated millions of Americans from geography, letting them work from across town or even across the country. But some jobs stubbornly resist those changes. There’s no “Zoom massage therapist,” for example. And while there are huge opportunities for cybercriminals, there are no Zoom cargo robbers.
Last week, federal prosecutors filed charges against four lowtech Philadelphia-area bandits. Six refrigerators mysteriously fell off the back of a truck, along with 60 cases of Jose Cuervo tequila, televisions, frozen meat, shrimp, and crab legs. But the real haul, which they poached from a tractor-trailer in a Walmart parking lot, was more than two million dimes, worth 234,470.80$. Think about the practicalities here. A dime weighs just 0.08 ounces. But two million dimes weigh over 11,000 pounds. And how do you launder them into something remotely spendable? One of the mooks traded thousands of dollars worth through local banks. (Totally not suspicious.) Another ran thousands through Coinstar machines, the same kind you use to turn the change in your couch cushions into an Amazon gift card.
Have you ever seen one of those slick movies where the criminal mastermind recruits a team of experts to pull off the perfect heist? The world’s best safecracker (who dropped out of MIT), the world’s best hacker (with a grudge against the NSA), the former actress with the chip on her shoulder, and their equally flawed genius friends? Well, our Philly bandits obviously never saw those movies. They didn’t switch vehicles between jobs. They texted each other to brag about their exploits. One of them even kept his coin machine receipts! So where do taxes come in? Section 61(a) of the code defines “gross income” as “income from whatever source derived.” That means our bandits are on the hook for reporting their haul. Section 63 provides that “taxable income” equals gross income minus specifically authorized deductions. Sadly, there’s no exception for “11,000 pounds of dimes that you pried out of a tractor-trailer that just left the Philadelphia Mint.” On the bright side, Section 162 lets our felons deduct “ordinary and necessary” business expenses. Should they take the standard 65.5 cents/mile allowance on those trucks, they should have swapped out? Or would they be better off taking actual expenses? A good proactive planner could save them a buck or two! Prosecutors haven’t filed tax charges here – the robberies happened earlier this year, so there’s no tax crime yet. Odds are good they won’t bother – at least one of the robbers will drop a dime on his fellows for a lighter sentence. More importantly, we’re here to help you make the most of all your legitimate business endeavors. You know where to find us!
Allan J Rolnick is a CPA who has been in practice for over 30 years in Queens, NY. He welcomes your comments and can be reached at 718-896-8715 or at email@example.com.