Taxation in Popular Culture: The Big Lebowski [1] 
By Dan Eller [2]

“Speaking of which, do you think, uh, that you could, uh, give me my $20,000 in cash?  Uh, my concern is, and I’ve got to check it with my accountant, but that this might bump me up into a higher tax, uh….”

The Big Lebowski presents the story of Jeffrey Lebowski (“The Dude”),[3] who is variously described as a “Los Angeles slacker and avid bowler”[4] as well as “an amiable unemployed slacker.”[5]  One might think that the ability to span not one, but two levels of “slackerism” would be a high achievement, but one might think too narrowly.  The Dude has much more to offer.  The above quote occurs about halfway through the movie when The Dude asks his “employer” for a payment related to certain services The Dude performed.  Although the conversation then trails off to other plot points, the quotation presents interesting material for consideration by tax professionals.

Tax Brackets.   The Dude touches on an important aspect of the Internal Revenue Code of 1986, as amended (the “Code”).[6]  Section 1 of the Code provides for graduated tax rates across various brackets.  The Big Lebowski was released in 1998.  Although it is unclear from the movie when the story was set, we can work with 1998 as the year in which The Dude would have made this statement.  At that time, the lowest Section 1 tax bracket for an unmarried [7] individual went up to $25,350.[8]  Given The Dude was “an amiable unemployed slacker,”[9] it is very unlikely he had more than $5,350 in taxable income from other sources.  Even if he did, however, it is safe to assume The Dude’s Section 63 “taxable income” would likely have been less than $25,350 by the time he took into account his standard deduction (it is safe to say The Dude was not an itemizer – itemizing, let alone filing tax returns, is too much of a hassle for a slacker) and personal exemptions.  On the balance, therefore, The Dude’s concern regarding being bumped into a higher tax bracket seems unfounded.  But is that what is really going on here?  Of course not.

Cash-Method Taxpayer.  As slackers sometimes do, The Dude is ignoring a few important details.  The Dude is almost certainly a cash-basis taxpayer because he is an individual.  Whether he receives a cash or a check (as later in the same scene he indicates he would accept), The Dude will have income upon receipt.[10]  Accepting the payment in the form of cash will not solve his problems; indeed, regardless of the form of payment, failure to report the income may not only lead to assessment of additional tax, but also penalties and interest.[11]

Moreover, if he fails to report the income to avoid that annoying tax bracket consequence, he might be in for bigger problems.  He might attract the attention of the IRS’s Collection Division, which could seek to prosecute The Dude for a tax crime under Section 7201, Section 7202, or several other statutes.[12]  Should he decide to deposit the sum in a bank account he would be required to complete a Currency Transaction Report (FinCEN form 104)[13] or face potential consequences for “structuring” a transaction prohibited by 31 U.S.C. § 5324.  Potential consequences include the criminal penalties imposable under the Federal Sentencing Guidelines.[14]

The Importance of a Good Accountant.  Whether or not he actually meant it, The Dude appreciates the importance of conferring with an accountant when trying to figure out complex tax consequences.  If The Dude were to confer with his accountant, the accountant would inform The Dude of his filing requirements and the other issues discussed above.  Consistent with the accountant’s duties and the potential for a tax-preparer penalty under Section 6694, the accountant would advise The Dude to report the entire $20,000 in the year of receipt.  And The Dude would do just that because “The Dude abides.”

Conclusion.  The Big Lebowski presents a “very complicated case”[15] of civil and criminal tax concepts for our consideration.[16]  “You know, a lotta ins, a lotta outs, lotta what-have-yous.”[17]  In the end, The Big Lebowski delivers some great tax content to think about over a White Russian.  On a scale of zero to 300, therefore, I score this movie a Turkey. 

Originally published in the Oregon State Bar Taxation Section Newsletter, Spring 2016

[1]  The Big Lebowski (Gramercy Pictures 1998).  Quotations from this movie are used at times in this article. 

[2]  Dan Eller is a shareholder in the Portland, OR office of Schwabe, Williamson & Wyatt, who focuses his practice in the areas of tax and business law, advising clients with both transactional and controversy matters.  Dan is a Past Chair of the Oregon State Bar Taxation Section.  Special thanks go to Marc Sellers for his assistance in reviewing an early draft of this article.  

[3]  Or “His Dudeness, or, uh, Duder, or El Duderino, if you’re not into the whole brevity thing.”  Whatever you choose, do not go with “Mr. Lebowski.” 

[4]  https://en.wikipedia.org/wiki/The_Big_Lebowski.

[5]  https://en.wikiquote.org/wiki/The_Big_Lebowski. 

[6]  Or, “The Code, man,” as The Dude might say. 

[7]  The Dude represents he is unmarried.   

[8]  http://taxfoundation.org/article/us-federal-individual-income-tax-rates-history-1913-2013-nominal-and-inflation-adjusted-brackets.  

[9]  https://en.wikiquote.org/wiki/The_Big_Lebowski.

[10]  Citation.

[11]  Under Section 6321, the government’s statutory tax lien extends to “all property and rights to property, whether real or personal, belonging to (the delinquent taxpayer).”  Thus, the lien would extend to such personal items as bowling balls and bathrobes, exposing those items to seizure to pay the tax.

[12]  Given The Dude is a slacker, he probably does not file tax returns.  Section 7203 (willful failure to file) could provide another basis for prosecution. 

[13]  See, 31 C.F.R. § 1010.301.

[14]  See generally, USSG § 2T1.1; § 2S1.3.

[15]  https://en.wikiquote.org/wiki/The_Big_Lebowski.

[16]  Another subplot of The Big Lebowski involves the alleged misuse of a private foundation’s funds.  Although that could also form the basis of a similar discussion, in the end I found this subplot to be more nebulous. 

[17]  https://en.wikiquote.org/wiki/The_Big_Lebowski.