Finding gold bars or something similar is taxable under the IRS “treasure trove” rule, according to commentator Rob Wood. IRS Publication 17 includes this definition: “Found property. 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.” Mr. Wood discusses the story at length in this article in Forbes magazine.
Wood points out that the IRS does follow the news, perhaps not as part of a plan, but people who work for the IRS see the same stories as the rest of us. So sometimes the IRS will learn about taxable windfalls from reading about them. Sometimes, publicity can be a bad thing for a taxpayer.
Generally, finding something you lost is not a taxable event. However, Wood explains, if you deducted a stolen car, for example, and you later recover it, the recovered item becomes income and is taxable.
If something you lose appreciates in value before you get it back, there may be tax consequences. Someone in this situation should certainly see advice from a tax professional.
For more information on the subject, please refer to Mr. Wood’s article in Forbes. Robert Wood is a tax attorney with Wood, LLP in San Francisco, California and spoke with The Tax Law Channel, an affiliate of The Legal Broadcast Network. The Legal Broadcast Network is a featured network of the Sequence Media Group.