February 18, 2005
Income
This story from yesterday's Times Picayune discusses how a law firm where some friends of mine used to work had to close its doors last year when the partners discovered their CFO had embezzled around $770,000 from the firm over a 20 year period. The embezzlement left the firm deeply in debt and was particularly disheartening because it couldn't have happened to a nicer group of lawyers.
My favorite part of yesterday's article is this:
In addition to charging Lee with defrauding the firm, the U.S. attorney's office nailed him for not reporting taxes on the stolen money, or on his legitimate earnings.
"While Lee effectively stole the $769,806.72 from the firm over a period of years, this money is considered income to Lee pursuant to the United States Tax Code," prosecutors wrote to the court in explaining the charges.
So, earnings from embezzlement are reportable income. Huh. Who knew? (besides Death & Taxes -- I'm talking about what normal people know about the Tax Code) I'm gaining new respect for the IRS.
Posted by Kitty at February 18, 2005 08:49 AM
Comments
I knew that. It was the subject of an LA Law episode a few years ago.
Posted by: Rob at March 2, 2005 10:10 AM
bravenet.com
Al Capone was ultimately nailed, not for his criminal activity, but for tax evasion for failing to report the proceeds of the criminal activity. It should come as no surprise that this guy got busted for tax evasion as well.
Posted by: Death & Taxes at February 20, 2005 06:10 PM