United States v. Leatherwood, 2023 U.S. App. LEXIS 12345 (9th Cir. 2023)
U.S. v.
Does the Internal Revenue Code allow the IRS to assess and tax income derived from illegal activities?
All income, from whatever source derived, is included in gross income and subject to taxation under the Internal Revenue Code, as established in James v. United States, 366 U.S. 213 (1961).
The Court held that income derived from illegal activities is subject to federal income taxation under the Internal Revenue Code.
U.S. v. Leatherwood is instrumental in reinforcing the federal government's ability to ensure all types of income are reported and taxed, thus maintaining the integrity of the tax system. For law students, it illustrates how statutes can serve multiple public policy goals such as revenue collection and crime deterrence. It also provides critical insight into how legal doctrines evolve through case law to address complex issues at the intersection of different areas of law.