Recently I have helped a friend of mine to make two cashier cheques. 
Both are in large amount - $5,000 USD.  During the transaction, the
teller tell me that this monetary transaction will be reported due to
laws mandated by the federal government (in the United States).  I
understand the situation, as this is a fairly large amount of money. 
Though, the teller specifically told me that due to the its amount, it
has to be reported.  So I take that this transaction will be reported
to the Federal Reserve Bank, though I am not sure what do they mean by
reporting.  Now my main concern is, is there any tax implication on
this transaction, meaning, would I be taxed on this moeny (both
federal and state), even though it is not my money?

Greetings, oogle!

The main purpose of the Currency Tracking Reporting required of
Financial Institutions by the Federal Government is, as part of the
laws [sometimes referred to as "Know Your Customer" laws, AML
(Anti-Money Laundering) laws, and AT (Anti-Terrorist) laws] intended
to help identify and stop illegal activities such as laundering of
money from drug dealing, theft, gambling and other money-making
enterprises that violate the law, or the funding of terrorist
activities.

The applicable laws include:
1970 - Bank Secrecy Act
1986 - Money Laundering Control Act
1992 - Annunzio-Wiley Anti-Money Laundering Act
1994 - Money-Laundering Suppression Act
1996 - Funds Transfer Rules
2001 - Patriot Act Title III
       (Anti-Terrorist and Anti-Money Laundering Provisions)

These transactions are not simply reported to the Federal Reserve Bank
per se; they are reported to the Department of the Treasury via the
following agencies:
(From Breffni McGuire of the Tower Group)
"The Securities and Exchange Commission (SEC) and the Commodity
Futures Trading Commission (CFTC) are added to the list of functional
industry regulators under the BSA, which includes the Federal Reserve
Bank, the Federal Deposit Insurance Corporation, the Office of the
Comptroller of the Currency, the Office of Thrift Supervision, and the
Credit Union National Association."
http://www.aciworldwide.com/pdfs/aci_trends_frauddetect2.pdf

(This is an Acrobat .pdf document. If you do not already have Acrobat
installed on your PC, you can download the free Acrobat Reader here:
http://www.adobe.com/products/acrobat/readstep.html  ) 

The html version of this document is here:
http://216.239.57.100/search?q=cache:2wSmI-9B5rkC:www.aciworldwide.com/pdfs/aci_trends_frauddetect2.pdf+atchley+ctr+software&hl=en&ie=UTF-8

According to Ms. McGuire:
"Signed by President Bush on October 26, 2001, Title III of the USA
Patriot Act, the International Money Laundering Abatement and
Anti-Terrorist Financing Act, will add sweeping new challenges for US
banks as regulations are issued over the course of 2002.  The Act adds
to the existing body of anti-money laundering (AML) law and introduces
provisions for combating anti-terrorist financing (AT) into the
anti-money laundering compliance activities of financial institutions.
Title III significantly increases the regulatory burden on banks as
well as the need for products and technology to support both AML and
AT financing activities."
http://www.aciworldwide.com/pdfs/aci_trends_frauddetect2.pdf


Now, to address your main Question: Your identity was noted by the
bank teller not for Tax Reporting purposes, but for "Know Your
Customer" purposes. These transactions in themselves will not incur
tax liability to you, nor to the person to whom the money belonged.

HOWEVER, should the Department of the Treasury decide that there is a
possibility that these transactions might be related to illegal
activities, they may very well notify the IRS (Internal Revenue
Service Tax Agency) to conduct an audit of your and/or your friend's
financial and tax records, as well as possibly other Federal
investigative agencies such as the FBI (Federal Bureau of
Investigation) to conduct an investigation of your and/or your
friend's financial and other activities.

THEREFORE, I recommend that you make sure your financial records are
all in order, and that you are not involved in anything that might be
considered illegal. If these agencies start digging, they will likely
find any such irregularities or illegalities.

As long as you have been behaving yourself, you should not have
anything to worry about in terms of an IRS audit or any other type of
investigation.


Search Strategy

currency tracking reporting software
://www.google.com/search?hl=en&lr=&ie=UTF-8&oe=UTF-8&q=currency+tracking+reporting+software&btnG=Google+Search

and my own personal knowledge as primary software support for Currency
Tracking for a financial institution


Before Rating my Answer, if you have any questions about this
information, please post a Request for Clarification, and I will be
glad to see what I can do for you.

I hope that this Answer has provided exactly the information that you
were seeking!

Regards,

aceresearcher

Excellent reply, and exceptional delivery speed, within an hour!