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Legal or Not, the IRS taxes all income

//Legal or Not, the IRS taxes all income

Legal or Not, the IRS taxes all income

The World Cup brought ticket scalping into the spotlight, but the IRS always remembers

Is there a difference between trading tickets with a friend for a stay at their vacation home and scalping tickets for a big game? One you might see as a legal trade and the other as obviously illegal. To the IRS there is no difference, all are taxable. If you are casually swapping tickets you might not even think of taxes in such a small, one off trade.  But scalping tickets for a huge profit, clearly the IRS is going to want its cut.

The IRS has been very clear that regardless of legality, your income is still taxable. If you are in the business of buying and selling tickets then it is ordinary income. A casual sale may fall under the capital gain tax. If you have held onto the ticket for less than a year your profit could be taxed at the highest rate of 39.6%. Trading the ticket for another benefit may make the gain harder to detect, but still the IRS could question the activity during an audit.

The IRS has great history utilizing tax crimes to bring down illegal operations. Al Capone was arrested for income tax evasion. Similarly, scalpers and drug dealers are all generating income, albeit through illegal means. The IRS taxes income, so if you do find yourself in a situation where you do want to profit from inflated prices over a now hot event be sure to keep the proper documentation and report it with your tax return. You might decide you’d rather attend the game yourself than pay them a chunk of your profits, but at least you won’t have the same fate as the scalpers and Al Capone.

About Freeman Tax Law

Freeman Tax Law is equipped to handle all domestic and international tax law matters. At Freeman Tax Law, the attorneys and professional staff have vast experience with foreign tax compliance, international tax planning, and resolving tax controversies involving offshore banking matters. Freeman Tax Law helps taxpayers and foreign entities become in compliance with laws such as Foreign Account Tax Compliance Act (FATCA) and Offshore Voluntary Disclosure Program (OVDP). In addition to handling complex tax controversies, the Freeman Tax Law team has extensive expertise in assisting clients with wealth management and estate planning.

Freeman Tax Law

(855) 935-5945

info@freemantaxlaw.com

www.freemantaxlaw.com

By | 2017-01-01T11:27:04+00:00 October 1st, 2014|Freeman Tax Law|Comments Off on Legal or Not, the IRS taxes all income