If you found gold coins, meteorites or cash stuffed in a piano, the tax man wants a piece

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Consider this a public service announcement for all treasure hunters: Uncle Sam wants a piece of your loot.

Someone who makes a valuable discovery — whether gold coins, meteorites or even cash — generally owes tax on that haul, which is known as “found” property.

The tax is twofold: a levy upon acquisition and, if eventually sold, on the profit.

Its taxability is due to a basic premise of tax law: Income is taxable unless the Internal Revenue Code excludes it from taxation or allows for a tax deferral, said Troy Lewis, an associate professor of accounting and tax at Brigham Young University.

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“Is there a treasure-hunter exclusion?” Lewis said. The haul would be taxed according to ordinary income tax rates. The taxation of found properties was established by a 1960s court case, TurboTax reports. When cleaning the piano seven years later, they discovered $4,467 in old currency. The couple exchanged their currency at a local bank for new notes and paid $836 in income tax. They later claimed that the money was not taxable. A federal judge rejected the premise, siding with the IRS in federal court.

Valuable discoveries happen more often than you might think.

For example, in June, a man found more than 700 Civil War-era gold coins in a Kentucky cornfield, a treasure that may reportedly be worth more than $1 million. A museum in Maine gave $25,000 for anyone who could find a chunk of a meteorite that weighed at least one kilogram after it landed near the U.S./Canada border. There are caveats. There may be some questions about legal ownership. Does the item you found really belong to you or not? The tax code provides preferential rates for profits on investments and other properties like collectibles held over a period of more than one year. In this case, capital gains taxes would apply. If held for a year or less, those preferential capital gains tax rates disappear.

Many found items, like gold coins and meteorites, would likely be considered collectibles, Lewis said. Lewis said that many found items, such as gold coins and meteorites, would likely be considered collectibles.