Tennessee's "crack tax" (struck down as unconstitutional not long after its creation) notwithstanding, the Internal Revenue Service has a history of charging those involved in illegal activities with tax evasion. Al Capone and Soviet Spy Aldrich Ames both were charged with tax evasion after they did not report the money made from their illegal activities. After all, the IRS instructs taxpayers to report any illegal activity income on line 21 of the Form 1040, where other income is reported. So in reality, someone committing crimes and earning revenue for this activity could avoid tax evasion charges by reporting it on line 21. But then of course you've just admitted to conducting illegal activities. While technically confidential between you and the IRS, the common belief is that the IRS will find a way to alert the authorities, either through disclosure in an audit or interdepartmental alliance. So, most people don't report their illegal activities, don't incur tax and go on tax-free until they get caught.

The final episode of “ Breaking Bad ” is here. But I don’t want to discuss what happens in the finale or even this season. Instead, I want to focus on the tax implications of what Walter White and his alter ego Heisenberg have done. (SPOILER ALERT: There are no spoilers contained herein from any episodes airing in 2013, but there may be some if you haven’t caught up to the last season).

So the first question is, when does Waltget caught? He, Skyler and Jessie, along with their surprisingly qualified, but sleazy attorney, Saul, have quite the money laundering scheme in place. And from what it looks like, not much of it is getting spent on big items (outside of Junior’s birthday present, Hank’s rehab and other various “necessities”). With most of the greenbacks from Blue Skybeing cached in a storage unit, it might take a while for any authorities to notice the fiscal improprieties taking place at the car wash. But even when they do get caught, no matter the length of time, the statute of limitations will not apply since any tax returns would have been filed fraudulently, and thus open to investigation at any time.

The next important question: what would the tax bill be when the IRS agents eventually catch up to the methamphetamine money trail? One zealous “Breaking Bad” viewer calculated the cash Walt had in his storage facility to be between $17.5M and $43.9M. Of course, this is the profit after expenses (the IRS does let you deduct business expenses relating to illegal activity, except in the case of trafficking illegal substances). So, materials, labor, the cost of the RV, the business meals at Los Pollos Hermanos - those are all not considered deductible expenses. Taking the mean of the profit, about $30.7M, and assessing the full rate of 39.6%, equals a $12.2M in income tax. Add the self-employment tax that's due on his drug-making sole proprietorship for $4.7M more. (He should have incorporated!!!) In New Mexico, state taxes are 7.6%, for another $2.33M. This brings Walt’s total tax bill to $19.23 million dollars! But don't forget, since he's guilty of tax evasion, penalties and interest will push that amount much, much higher. I don't know if even Saul would be able to finagle Walt out of this one.

So with the series at an end, I think we can safely say that crime just doesn’t pay.

Brad Garland, CPA, Manager – Taxation, Hall Albright Garrison & Associates. Brad is a licensed CPA in Alabama and Georgia and has a Master’s of Accountancy from Auburn University, where he also obtained his BSBA.