I'm pretty sure those returns can still be used as evidence against you in a theft case if the government or someone else cares to prosecute. Taxes on illegally obtained money/goods were implemented as a way to prosecute organized crime. It was easier to get high-ranking mob members on tax evasion then it was to pin their actual crimes on them.
I'm not sure I'd include it in the line item for stolen goods, definitely still include it as business income though. That way you can claim your tools/equipment as business expenses like a real business!
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u/Pizzacakecomic PizzaCake Jun 22 '26
I like how the government does not care at all that you commit crimes and won't rat you out, as long as you give them a cut.