## Facts

- In 1957, Ermenegildo Cesarini and his wife bought a used piano at auction for about $15.
- In 1964, while cleaning the piano, they discovered $4,467 in old currency hidden inside.
- Unable to identify a prior owner, they exchanged the old bills for new currency at a bank.
- The taxpayers reported the $4,467 on their 1964 joint federal return as “ordinary income from other sources.”
- In 1965, they filed an amended return removing the $4,467 from gross income and sought a refund of $836.51; the IRS denied the claim in 1966.
- The taxpayers filed a refund suit; the material facts were stipulated and only legal questions remained.

## Issues

1. Whether the $4,467 found in the piano was includable in gross income under I.R.C. § 61.
2. If includable, whether the income was realized in 1957 (year of purchase) rather than 1964 (year of discovery), such that I.R.C. § 6501 would bar taxation.
3. If taxable in 1964, whether the amount qualified for capital gains treatment under I.R.C. § 1221 instead of ordinary income.

## Decision

- The court entered judgment for the United States and denied the refund.
- The $4,467 was gross income under I.R.C. § 61.
- The amount was taxable in 1964, when it was discovered and reduced to undisputed possession, not in 1957 when the piano was purchased.
- The amount was taxable as ordinary income, not as capital gain.

## Legal Principles

- I.R.C. § 61 broadly includes “all income from whatever source derived,” and amounts are taxable unless a specific exclusion applies.
- “Treasure trove” (found money) is includable in gross income for the taxable year in which it is reduced to the taxpayer’s undisputed possession.
- Realization for found property occurs upon discovery and dominion/control, not upon acquisition of the container or item in which it was concealed.
- Capital gains treatment generally requires gain from the sale or exchange of a capital asset; mere discovery of cash is an accession to wealth taxed as ordinary income.

## Conclusion

The court held that cash found inside a purchased piano was taxable gross income in the year of discovery because the taxpayers then obtained undisputed possession, and the amount was ordinary income rather than capital gain; accordingly, no refund was due.


Cesarini v. United States, 296 F. Supp. 3 (N.D. Ohio 1969)