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Comment by grecy | Hacker News Reader

Would he have any grounds to charge the government and/or the casino of theft?

He won that money in a fashion deemed not-illegal, the IRS even says he legally won it and want to tax him for it, and then they took it off him.

Sounds like theft to me.

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You need to sue to get it back. Even if the trial is acquitted. It's a major source of revenue for police. It's one reason why they're becoming more and more militarized.

New Yorker Article: http://www.newyorker.com/magazine/2013/08/12/taken

Police departments actually get a lot of their military-grade equipment free from the federal government. After the military has given away their "obsolete" tanks to police departments, they can order new tanks from defense contractors. This makes the very rich, influential people at the top levels of the military-industrial complex even richer and more influential.

Not quite free, but purchased using grants. It works out, that if they don't take the grants, they'll be in danger of losing funding in the future. These grants aren't just, "Here's a tank". It could be, "here's a tank, and medical equipment"

In essence, their hand is forced to take the gift. There's been backlash about this.

http://rt.com/usa/186788-police-weapons-military-grants/

http://www.bostonglobe.com/news/nation/2014/08/23/obama-orde...

> the IRS even says he legally won it and want to tax him for it

The job of the IRS isn't to pass judgement on the legality of income, just to collect taxes. If you earn money, it's taxable; that's true wether you're a computer consultant, a video poker gambler, a hitman for hire, a drug lord, or Al Capone.

Right, but the distinction here is they believe he earned it.

If they believe he earned it, and someone else took it away, isn't that theft?

The belief of the IRS is entirely separate from the issue of theft and bringing it up in this context is just confusing the issue. It's like asking "If they believe he earned it, and the sun is rising, is it before noon?"

Not necessarily. Taking somebody else's property is only theft if you didn't have a legal right to do it. For example, if the IRS levied his property to satisfy the tax debt, that would not legally be theft because the IRS is legally entitled to impose levies for that purpose. It also would not mean that they didn't think he earned the levied property. It just means that they wanted the property and had a legal right to take it.

And indeed, illegal income is discussed on the IRS web site right next to the legal kind. See:

http://www.irs.gov/publications/p17/ch12.html

Choice quotes:

"Bribes. If you receive a bribe, include it in your income."

"Illegal activities. Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity."

And of course they want to have it both ways. For example, income from illegal prostitution is taxable, but associated expenses can not be claimed as a business expense.

>And of course they want to have it both ways. For example, income from illegal prostitution is taxable, but associated expenses can not be claimed as a business expense.

It's complicated and I'm not a lawyer (and certainly not trained in reading court judgements), but this appears to be not true in all cases. Commissioner v. Tellier [1] seems to say that with some well-defined exceptions (although it doesn't appear to go into what those exceptions are), expenses incurred in the development of an illegal business are deductible just like they would be for a legal business. Examples given are paying legal defense fees, and rent and wages paid for a then-illegal gambling operation. So it may well be the case that expenses incurred while developing a career as a prostitute (e.g. phone bills, condoms, advertising, hotel rooms, and travel) could be deductible.

[1]: https://supreme.justia.com/cases/federal/us/383/687/case.htm...

edit: Ah, I read a bit deeper and found the exceptions.

Only where the allowance of a deduction would "frustrate sharply defined national or state policies proscribing particular types of conduct" have we upheld its disallowance [...] Further, the "policies frustrated must be national or state policies evidenced by some governmental declaration of them." [...] Finally, the "test of nondeductibility always is the severity and immediacy of the frustration resulting from allowance of the deduction." [...] In that case, as in Hoover Motor Express Co. v. United States,356 U. S. 38, we upheld the disallowance of deductions claimed by taxpayers for fines and penalties imposed upon them for violating state penal statutes; to allow a deduction in those circumstances would have directly and substantially diluted the actual punishment imposed.

So based on that reading (and again, I'm not a lawyer), it seems like expenses a prostitute incurs would be absolutely deductible, because disallowing them doesn't frustrate the criminalization of the activity.

I may be misremembering it, and it's actually paying for prostitutes as a business expense that isn't tax deductible.

The lost money may be tax deductible.

http://www.irs.gov/taxtopics/tc515.html

Theft seems covered. Even if its Uncle Sam.

If the Feds lose, they will wrap you in red tape until they win.

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