Incredible stuff from the IRS.
According to IRS publication 17, the Internal Revenue Service wants taxpayers to include on their forms “income from illegal activities, such as money from dealing illegal drugs.” Make sure you put that on “Schedule 1 (Form 1040), line 8z, or on Schedule C (Form 1040) if from your self-employment activity,” the IRS wrote.
The agency writes: “if you steal property, you must report its fair market value,” but only if you don’t “return it to its rightful owner in the same year.”
In addition, they also provide guidance no how you can claim a dependent that is missing or has been kidnapped.