They took it and went gambling instead.. My wife and I lived next to my parents in a side by townhouse. They charges us $800/month for 5 years.
Why would you want to do something like that -- to your Parents? Your judgment on this is just wrong and what they do with their money is their business. If you think so little of them then move out of the home they have generously provided you at a bargain rent for a fixed 5 year period. FYI....even if you did report them they would be able to claim deductions for the now "rental" home that would likely offset any or all of the tax due on the additional $9,600 per year income.
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International Law Attorney
You could but the IRS likely would not do anything and your relationship with your parents would be in the toilet.
This is not legal advice but a general comment on society based on a limited set of hypothetical circumstances. No one should act or refrain from acting based on these comments without seeking appropriately licensed legal or professional advice. The author disclaims all liability in respect to actions taken or not taken based on his comments.