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CA Woman Finds $36,000 In a Free Craigslist Chair, Leading to Tax Questions

by
Rebekah Barton
on
6/6/2022
CA Woman Finds $36,000 In a Free Craigslist Chair, Leading to Tax Questions

Mid-60s widow, Vicky Umodu, recently relocated to Colton, California, a town in San Bernardino County, to be closer to her daughter and grandchildren. To furnish her new home, Umodu began scouring the internet for good deals.

Per a Washington Post report shared above, she thought she'd "hit the jackpot" when she ran across a Craigslist article for free furniture. However, as the Post's article goes on to note, Umodu got a lot more than she bargained for:

Vicky Umodu sits on a chair that may come with an unexpected tax surprise. (Photo credit Diseph Mgborogwu)

It was May 18, and she and her son, Oly Umodu, 29, had collected the free furniture and moved the pieces into their living room. Vicky Umodu said she felt something unusual as she was placing the upholstered cushion on an oversize, cream-colored armchair. The seat cushion seemed off.

She thought perhaps there was a heating pad inside, so she unzipped the cushion, stuck her hand in and felt around.

"It wasn't a heating pad, but I could feel there was a bunch of paper," she said. "When I pulled it out, I was shocked."

Umodu and her son uncovered $36,000, separated into various envelopes, including Chase Bank envelopes and plain manila envelopes. 

Credit: Vicky Umodu

While most people would have kept the unexpected financial windfall for themselves, Umodu and her family did the honorable thing, contacting the gentlemen who had posted the online classified ad in the first place. 

The man, who declined to be identified when he spoke to the Post, shared that the furniture he gave Umodu had previously belonged to his late uncle, who had hidden money around his house for several years. 

He had previously located about $1,000 but didn't realize there was significantly more hidden in the cushions of the chair he gave to Umodu and her son.

Ultimately, he told the Post, "I thanked her and her son profusely for being good people," he said, noting that he gave Umodu $2,200 to buy a new refrigerator as an extra show of gratitude.

"They did the honest thing," he said. "Today, that's a rarity. Not everyone would do that."

Can you be taxed for money you found?

While Umodu did the honest thing and returned the money she found, there are situations in which people would have chosen to keep the funds - the "finders keepers" mentality - or in which the money couldn't have been returned for one reason or another. 

The question surrounding these types of circumstances is, of course, what are the tax implications of these situations?

A 1969 court case, Cesarini v. United States, set the precedent for this in the United States of America. As outlined by LexisNexis, the facts of the case are as follows:

Plaintiffs Ermenegildo Cesarini and his wife purchased a used piano at an auction sale for approximately $15.00. In 1964, while cleaning the piano, the couple discovered the sum of $4,467 in old currency; they decided thereafter to keep the piano instead of discarding it, as previously planned. The couple exchanged the old currency for new at a bank and reported the sum of $4,467 on their 1964 joint income tax return as ordinary income from other sources. However, the couple sought a refund, which was denied by the Commissioner of Internal Revenue. The couple filed an action in federal district court for the recovery of income tax payments made plus interest on the money they found inside the piano; in the alternative, the couple sought to have the found money treated as capital gains.

Ultimately, it an Ohio district court concluded that the couple was not entitled to a refund of amount they requested, nor were they entitled to receive capital gains treatment on the sum of money found hidden in the piano.

This legal precedent would likely have also applied to Umodu if she had kept the $36,000 and attempted to request a tax refund on it. 

At TaxBuzz, we know that life - and taxes - can be complicated. That's why we offer a network of nearly 500,000 professionals to help you with all of your tax questions, even when the most unexpected circumstances arise. 

Click here to find a tax expert who can help you through all of life's hurdles today.

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Rebekah Barton

Rebekah Barton

Rebekah's search engine optimization career began completely by accident as a college student. Over the course of her career so far, she has "grown up" with the SEO industry, from writing content while juggling classes to managing her own teams of writers and overseeing SEO strategy in subsequent roles. She is excited to bring her passion for high-quality content to CountingWorks, Inc.

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