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I have recently rewatched Breaking Bad, and something that happened in the last season had me wondering. Jessie tries to give $2.5M each to Mike's granddaughter and the family of the boy that was killed. Saul states that in both cases, this suspicious money would be seized instantly and advises against this plan. My question is, in a similar, real situation like that, would the authorities actually take all of the money if there was no clear source if a legitimate origin isn't known, but they also couldn't conclusively prove its the product of criminal activity? What legal reason would they have for taking it, provided the recipients were willing to report the income and pay the necessary tax?

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    It depends what you do with the money, making this hard to answer. If you keep it under your bed, you're fine. Anything involving banking, investment, or finance will probably result in you coming up against anti-money laundering legislation. You may want to use it to buy different things, when you may or may not run into people who are legally obliged to ask where you got it.
    – Stuart F
    May 21, 2023 at 19:22

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The process would play roughly as follows.

  1. Jessie gives $2.5M to Mike's granddaughter as a gift.
  2. Mike's granddaughter files this as income. I believe the appropriate tax law would be inheritance law and as they are not related the tax would be quite high.
  3. The tax office notices that this is highly unusual and suspicious but not illegal per se. Hence they investigate to find out more.
  4. They find out that Jessie did not legally own the $2.5M he gave (because it was illegal drug money). Hence Jessie was not in a position to make this gift and they can and will confiscate it from Mike's granddaughter.

Note that if Jessie can prove that he legally owned the money there is no crime and he is free to give it to whoever he pleases.

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    This is incorrect at step #2. Most gifts are neither taxable nor reportable as income. It's the gift giver, not the receiver, who must file and pay tax. Mike's daughter wouldn't file this as income, Jesse would have to file it as a gift. May 22, 2023 at 18:54
  • @NuclearHoagie I think this is jurisdiction dependent. In German law the recipient needs to file the gift as income. If in the US this is the job of the gift giver I don't know how or why the strategy would fail or how the tax office would find out.
    – quarague
    May 23, 2023 at 6:32
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You can keep unless they can take. The police cannot, for example, randomly enter my house and seize my property – any seizure must be reasonable. They cannot arbitrarily seize my bank accounts. Unless we're dealing with property in my possession when I am arrested, there probably has to be a warrant to search and seize, supported by some kind of evidence that there is evidence of a crime to be found.

Once the police are in possession of your property, they can (details vary by state) initiate a legal process of civil forfeiture, where they sue the property for its criminality, and if they win in court, they get to keep the money (or other property). The government has to prove by a preponderance of evidence that the money is the fruit of criminal activity. That means that the owner has to prove that the property is "legal". The specific legal requirements vary by state, here is a study of what the requirements are, though New Mexico is not one of those states that makes civil forfeiture easy and profitable for the police.

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  • Yeah that all makes sense. But I specifically meant if you decided to declare it to the IRS, pay income tax on it, and try and put it in a bank account. Of course like the above comment says, you're definitely going to get some trouble with anti-money laundering legislation snd the authorities would take possession of it. The main part of my question is after a trial, where you could not prove the origin and this mi ey because you genuinely didn't know where it came from but the authorities also could not prove it to be the fruit of illegal activities, what would happen next?
    – Ethan2001
    May 21, 2023 at 19:53
  • Assuming that the government sued the money for being illegal and offered a smattering of evidence that it could be the fruit of illegal activity, then because you can't disprove their claim, they keep the money.
    – user6726
    May 21, 2023 at 20:00
  • So what, then, would happen if by some miracle the government could produce a modicum of evidence as to the nature of this money. If the source was completely unknown, they could not find a link to any person, organisation, or any known crime whatsoever, the only suspicion being the lack of a known legitimate source. Then would you be able to keep it, providing you followed the required legislation on income/inheritance tax, whatever would be appropriate?
    – Ethan2001
    May 21, 2023 at 21:04
  • There's a problem with the first two sentences in your comment: the source of the money is not completely unknown, if they have a modicum of evidence that the money is connected to a crime. As the owner of the money, you have to disprove that modicum of evidence. Also, incidentally, if the police cannot find a link to you (no proof of ownership), it's not your money so you wouldn't get to keep it. Any fact that you can use to your advantage in the lawsuit, they can also use.
    – user6726
    May 21, 2023 at 22:31
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    "The police cannot, for example, randomly enter my house and seize my property – any seizure must be reasonable." This is just not true. Many police jurisdictions can and do routinely seize money and goods that might be linked to criminal activity. They never have to prove it; the burden to prove it is legal is on the victim of "civil asset forfeiture"
    – abelenky
    May 22, 2023 at 12:21

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