Gifts and inheritances. In most cases, property you receive as a gift, bequest or inheritance is not included in your income. However, if property you receive this way later produces income such as interest, dividends or rents, that income is taxable.
Hobby losses. Losses from a hobby are not deductible from other income. A hobby is an activity from which you do not expect to make a profit.
If you collect stamps, coins or other items as a hobby for recreation and pleasure, and you sell any of the items, your gain is taxable as a capital gain. However, if you sell items from your collection at a loss, you cannot deduct the loss.
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 (.pdf files) if from your self-employment activity.
Jury duty. Jury duty pay you receive must be included in your income on Form 1040, line 21. If you must give the pay to your employer because your employer continues to pay your salary while you serve on the jury, you can deduct the amount turned over to your employer as an adjustment to your income.
Kickbacks. You must include kickbacks, side commissions, push money or similar payments you receive in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ, if from your self-employment activity.
Prizes and awards. If you win a prize in a lucky number drawing, television or radio quiz program, beauty contest or other event, you must include it in your income.
Pulitzer, Nobel and similar prizes. If you were awarded a prize in recognition of accomplishments in religious, charitable, scientific, artistic, educational, literary or civic fields, you generally must include the value of the prize in your income. However, you do not include this prize in your income if you meet all of the following requirements:
- You were selected without any action on your part to enter the contest or proceeding.
- You are not required to perform substantial future services as a condition to receiving the prize or award.
- The prize or award is transferred by the payer directly to a governmental unit or tax-exempt charitable organization as designated by you.
Rewards. If you receive a reward for providing information, include it in your income.
Sale of personal items. If you sold an item you owned for personal use, such as a car, refrigerator, furniture, stereo, jewelry or silverware, your gain is taxable as a capital gain.
Stolen property. If you steal property, you must report its fair market value in your income in the year you steal it unless in the same year, you return it to its rightful owner.
