From Temples to Tax Forms—Indiana Jones’s Guide to Taxing Treasures
This is part of our educational blog series, “The Short Form,” to simplify tax issues and explore the world through the lens of tax policy. Learn more about taxes with TaxEDU.
The end of an era is upon us: on June 30th, 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 taxing treasure.
How Is Treasure Taxed?
Like the priceless artifacts that Indiana Jones sought to protect, treasure often carries an aura of mystery and allure. From ancient relics to lost gold, treasures capture our imagination and, in some cases, raise questions about their taxation. But how does the tax code treat treasure?
Treasures are taxed differently depending on their origin and how they are acquired. Let’s delve into two common types.
Archaeological Treasures
As Indiana Jones often encountered, treasures unearthed through archaeological excavations may be subject to specific rules and regulations. In the U.S., such treasures generally fall under the Archaeological Resources Protection Act and are considered cultural heritage. Strict laws protect artifacts and sites on state, federal, and Native American lands.
Under this act, artifacts like the Ark of the Covenant, once unearthed through official excavations, become protected cultural heritage. In most cases, the ownership of historical artifacts is transferred to the state or relevant governmental authorities, rather than remaining with the individual who discovered them at the archaeological site.
For example, in The Last Crusade, a young Indiana Jones uncovers the Cross of Coronado at a Utah excavation site. According to Archaeological Resources Protection Act regulations, it would belong to the U.S. government or local authorities. In this scenario, Dr. Jones would not be subject to taxes 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 typically under the ownership and care of the government or authorized entities and exempt from taxation.
Found Treasures
Stumbling upon a treasure while exploring a forgotten cave or a hidden nook can be exhilarating—until you remember the tax bill coming your way. Found treasures, regardless of their form, are generally considered taxable income. The value of the treasure at the time of discovery becomes the basis for determining the tax liability.
Consider the California couple who, in 2013, stumbled upon an astounding treasure: 1,400 19th-century gold coins on their property. These rare collector’s coins, valued at nearly $10 million in 2013, far exceeded their original worth.
The IRS requires individuals who uncover found treasures to report the value of their findings 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 in their annual income tax return. This means that they would have owed income taxes on the $10 million of treasure found in 2013, and with the top federal and California state income tax rates at 39.6 percent and 13.3 percent, respectively, the couple may have faced a tax bill of nearly $5 million.
Taxed and Treasured
While Indiana Jones sought to preserve historical artifacts, the tax implications surrounding treasure can be complex. From archaeological treasures unearthed through official excavations to unexpected discoveries in forgotten corners of the world, the tax treatment can differ significantly. Just as Indiana Jones navigated treacherous paths in search of ancient artifacts, it is essential to tread carefully when it comes to taxes on treasures.
