It's taxable as ordinary income. What happens if you are undocumented and/or part of the criminal conspiracy, would be an interesting question.
Also can you be hauled in to court to testify? Can you be sued? Who pays the lawyer?
Our legal system is such a mess.
Think I’ll just pay the tax.😄
What if the entity that dropped the dime on the guy was a Section S LLC, as part of a Living Trust that was Disadvantage Minority owned and operated?