Nuestra Señora de Atocha,
which sank in a hurricane off Key West in 1622. But sometimes finding
buried treasure is far easier. Just ask the still-unidentified
California couple, known only as "John" and "Mary," who took their dog
for a walk and spotted the edge of an old can on the side of a trail
they had walked almost every day for years.
That can was so heavy, they thought it held lead paint. But as they
carried it back to the house, struggling with the weight, it burst open
to reveal the glint of gold. (Sounds like a real "Beverly Hillbillies"
moment, doesn't it!) That rusted-out can turned out to be just the first
of eight containing 1,427 mostly mint-condition gold coins, mostly from
the nearby San Francisco Mint, made from 1847 to 1894. Their face value
comes to $27,980, which isn't bad. But their market value may top $10 million. In fact, one coin alone — an 1866 Liberty $20 piece without the usual "In God We Trust" inscription — may be worth a cool million all by itself!
At one point, it looked like John and Mary might have to give up their
find. Back in 1900, a Mint employee named Walter Dimmick stole $30,000
worth of gold. Dimmick did his time for the crime, but the gold was
never recovered. If it had been Dimmick's haul that our lucky
couple found, they would have had to return it, even after all this
time. Fortunately, the Mint says they don't think that's the case, and
they won't be investigating. Mint spokesman Adam Stump told the San Francisco Chronicle,
"we’ve done quite a bit of research, and we’ve got a crack team of
lawyers, and trust me, if this was U.S. government property we’d be
going after it.”
Unfortunately, there is one government agency that will be
going after it, and you won't be surprised to hear it's our friends at
the IRS. The tax code says "gross income means all income from whatever
source derived," and that includes "treasure trove" proceeds like the
coins. The IRS clarifies that "if you find and keep property that does
not belong to you that has been lost or abandoned (treasure-trove), it
is taxable to you at its fair market value in the first year it is your
undisputed possession." And that, in turn, means John and Mary will
have to report the value of the coins on their taxes. They don't even
get to use the lower capital gains rates. So let's see . . . 39.6% for
Uncle Sam, plus 13.3% for California, leaves . . . well, barely half of
that $10 million! The worst part is, they owe the tax now even if they keep the coins instead of selling them.
What if John and Mary donated the coins to charity? Would that let them
off the hook? Nope! The problem is, you can only deduct charitable gifts
up to 50% of your income. That means our lucky couple could deduct just
half the value of their fortune, and still pay tax on the rest — even
if they give it all away. (The limit is even lower for gifts to private foundations — just 30%.)
Here at our firm, we search for hidden treasures, too. But instead of
doing it on the high seas, or in California mountains, we do it in the
tax code. Our quest is to unearth the deductions, credits, loopholes,
and strategies that can save you thousands. And you don't even have to
take your dog for a walk to do it. You just have to pick up the phone
and call us. (419) 468-8509. So what are you waiting for?
(419) 468-8509
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