This is part of our educational blog series, “The Short Form,” on simplifying tax problems and exploring the world through the lens of tax policy. Learn more about taxes with TaxEDU.
The end of an era is near: June 30he, the legendary Harrison Ford will don his iconic fedora for one last ride as Indiana Jones. As fans around the world anticipate this final adventure, let’s embark on our own excursion to unravel the mysteries of the treasury.
How is the treasury taxed?
Like the priceless artifacts that Indiana Jones sought to protect, treasures often have an aura of mystery and enchantment. From ancient relics to lost gold, treasures capture our imaginations and, in some cases, raise questions about their taxation. But how does the tax code treat the treasury?
Treasures are taxed differently depending on their origin and the way in which they are acquired. Let’s dive into two common types.
As Indiana Jones often found, treasures unearthed through archaeological digs may be subject to specific rules and regulations. In the US, such treasures generally fall under the Law for the Protection of Archaeological Resources and are considered cultural heritage. Strict laws protect artifacts and sites on state, federal, and Native American lands.
Under this law, artifacts such as the Ark of the Covenant, once unearthed through official excavations, become protected cultural heritage. In most cases, ownership of historical artifacts is transferred to the state or relevant government authorities, rather than staying with the person who discovered them at the archaeological site.
for example in the last crusade, a young Indiana Jones discovers the Coronado Cross at a dig in Utah. According to the regulations of the Archaeological Resources Protection Act, it would belong to the US government or local authorities. In this scenario, Dr. Jones would not be subject to tax on the artifact since he would not retain ownership.
Archaeological treasures are protected by specific laws and are often considered invaluable cultural assets. These treasures are usually under the ownership and care of the government or authorized entities and are exempt from taxes.
Stumbling upon treasure while exploring a forgotten cave or hidden corner can be exciting—until you remember the tax bill coming your way. The treasures found, regardless of their shape, are generally considered taxable income. He treasure value at time of discovery it becomes the basis for determining the tax liability.
Think of the California couple who, in 2013, stumbled upon an astonishing treasure: 1,400 19th-century gold coins on their property. These rare collector coins, valued at almost $10 million in 2013, far exceeded their original value.
The IRS requires people who discover found treasure to report the value of their finds as taxable income. In the case of the California couple, they would have been required to determine the fair market value of the coins at the time of their discovery and include that amount on their annual tax return. This means they would have owed income taxes on the $10 million of treasure found in 2013, and with California’s top federal and state income tax rates of 39.6% and 13.3%, respectively, the couple you could have faced a tax bill of nearly $5. million.
taxed and treasured
While Indiana Jones sought to preserve historical artifacts, the tax implications surrounding the treasure can be complex. From archaeological treasures unearthed through official excavations to unexpected discoveries in forgotten corners of the world, tax treatment can differ significantly. Just as Indiana Jones traveled treacherous paths in search of ancient artifacts, it’s essential to tread carefully when it comes to taxes on treasures.