17131. Part III of Subchapter B of Chapter 1 of Subtitle A of the
Internal Revenue Code, relating to items that are specifically
excluded from gross income, shall apply, except as otherwise
provided.
17131.1. (a) Gross income does not include any excludable
restitution payments received by an eligible individual (or the
individual's heirs or estate) and any excludable interest.
(b) For purposes of this section:
(1) The basis of any property received by an eligible individual
(or the individual's heirs or estate) as part of an excludable
restitution payment shall be the fair market value of that property
as of the time of the receipt.
(2) "Eligible individual" means a person who was persecuted on the
basis of race, religion, physical or mental disability, or sexual
orientation by Nazi Germany, any other Axis regime, or any other
Nazi-controlled or Nazi-allied country.
(3) "Excludable restitution payment" means any payment or
distribution to an individual (or the individual's heirs or estate)
that is any of the following:
(A) Is payable by reason of the individual's status as an eligible
individual, including any amount payable by any foreign country, the
United States of America, or any other foreign or domestic entity,
or a fund established by any such country or entity, any amount
payable as a result of a final resolution of a legal action, and any
amount payable under a law providing for payments or restitution of
property.
(B) Constitutes the direct or indirect return of, or compensation
or reparation for, assets stolen or hidden from, or otherwise lost
to, the individual before, during, or immediately after World War II
by reason of the individual's status as an eligible individual,
including any proceeds of insurance under policies issued on eligible
individuals by European insurance companies immediately before and
during World War II.
(C) Consists of interest which is payable as part of any payment
or distribution described in subparagraph (A) or (B).
(4) "Excludable interest" means any interest earned by any of the
following:
(A) Escrow accounts or settlement funds established pursuant to
the settlement of the action entitled "In re: Holocaust Victim Assets
Litigation," (E.D.N.Y.) C.A. No. 96-4849.
(B) Funds to benefit eligible individuals or their heirs created
by the International Commission on Holocaust Insurance Claims as a
result of the Agreement between the Government of the United States
of America and the Government of the Federal Republic of Germany
concerning the Foundation "Remembrance, Responsibility, and Future,"
dated July 17, 2000.
(C) Similar funds subject to the administration of the United
States courts created to provide excludable restitution payments to
eligible individuals (or eligible individuals' heirs or estates).
(c) (1) This section shall apply to any amount received on or
after January 1, 2000.
(2) Nothing in this section shall be construed to create any
inference with respect to the proper tax treatment of any amount
received before January 1, 2000.
17131.2. (a) Gross income does not include any excludable
settlement payments received by an eligible individual (or the
individual's heirs or estate) and any excludable interest.
(b) For purposes of this section:
(1) The basis of any property received by an eligible individual
(or the individual's heirs or estate) as part of an excludable
settlement payment shall be the fair market value of that property as
of the time of the receipt.
(2) "Eligible individual" means a person who was persecuted on the
basis of race or religion by the regime that was in control of the
Ottoman Turkish Empire from 1915 through 1923.
(3) "Excludable settlement payment" means any payment or
distribution to an individual (or the individual's heirs or estate)
that is any of the following:
(A) Is payable by reason of the individual's status as an eligible
individual, including any amount payable by any foreign or domestic
entity or a fund established by any entity, any amount payable as a
result of a final resolution of a legal action, and any amount
payable under a law providing for payments or restitution of
property.
(B) Constitutes compensation to the individual from 1915 until
1923, by reason of the individual's status as an eligible individual,
including any proceeds of insurance under policies issued on
eligible individuals immediately before 1915 and during the time
period from 1915 until 1923.
(C) Consists of interest that is payable as part of any payment or
distribution described in subparagraph (A) or (B).
(4) "Excludable interest" means any interest earned by any of the
following:
(A) A fund to benefit eligible individuals or their heirs created
by an international commission or an international organization.
(B) A fund subject to the administration of the United States
courts created to provide excludable settlement payments to eligible
individuals (or eligible individuals' heirs or estates).
(c) (1) This section applies to any amount received on or after
January 1, 2005.
(2) This section may not be construed to create any inference with
respect to the proper tax treatment of any amount received before
January 1, 2005.
17131.3. Any grant made in any taxable year by the Secretary of the
Treasury under Section 1603 of the American Recovery and
Reinvestment Tax Act of 2009 (Public Law 111-5) to a person that
places in service specified energy property shall not be includable
in the gross income or the alternative minimum taxable income of the
taxpayer, but shall be taken into account in determining the basis of
the property to which that grant relates, except that the basis of
that property shall be reduced using rules prescribed under Section
50(c) of the Internal Revenue Code in the same manner as a credit
allowed under Section 48(a) of the Internal Revenue Code, and
adjusted in accordance with rules applied by the Secretary of the
Treasury under Section 1603(f) of the American Recovery and
Reinvestment Tax Act of 2009 (Public Law 111-5).
17131.4. Section 106(d) of the Internal Revenue Code, relating to
contributions to health savings accounts, shall not apply.
17131.5. Section 125(d)(2)(D) of the Internal Revenue Code,
relating to the exception for health savings accounts, shall not
apply.
17131.6. Section 107 of the Internal Revenue Code is modified by
substituting in paragraph (2) the phrase "the rental allowance paid
to him or her as part of his or her compensation, to the extent used
by him or her to rent or provide a home" in lieu of the phrase "the
rental allowance paid to him as part of his compensation, to the
extent used by him to rent or provide a home and to the extent such
allowance does not exceed the fair rental value of the home,
including furnishings and appurtenances such as a garage, plus the
cost of utilities" contained therein.
17131.9. Gross income does not include any supplementary payment
received by an individual pursuant to Section 12306.6 of the Welfare
and Institutions Code.
17132. Section 114 of the Internal Revenue Code, relating to
extraterritorial income, shall not apply.
17132. Section 114 of the Internal Revenue Code, relating to
extraterritorial income, shall not apply.
17132.4. (a) For taxable years beginning on or after January 1,
2005, gross income does not include the death benefits received by an
eligible individual.
(b) For purposes of this section:
(1) "Death benefit" means the entire amount of the death benefit
payment made pursuant to Chapter 3.5 (commencing with Section 850) of
Division 4 of the Military and Veterans Code.
(2) "Eligible individual" means the surviving spouse of, or a
beneficiary designated by, any member of the California National
Guard, State Military Reserve, or Naval Militia who dies or is killed
in the performance of duty, as provided in Section 850 of the
Military and Veterans Code.
17132.5. Section 101 of the Internal Revenue Code, relating to
certain death benefits, is modified as follows:
(a) Section 101(h) of the Internal Revenue Code, relating to
survivor benefits attributable to service by a public safety officer
who is killed in the line of duty, is modified to apply to amounts
received in taxable years beginning after December 31, 1996, with
respect to individuals dying after December 31, 1996.
(b) (1) Section 101 of the Internal Revenue Code, as modified by
subdivision (a) is modified to additionally provide that Section 101
(h) of the Internal Revenue Code shall not apply to survivor benefits
attributable to service by a public safety officer who is killed in
the line of duty with respect to deaths occurring before December 31,
1996, that would otherwise be eligible for exclusion pursuant to
Section 101(h) of the Internal Revenue Code, as modified by Public
Law 107-15.
(2) The amendments made to this section by Chapter 691 of the
Statutes of 2005 shall apply to amounts paid after December 31, 2001,
with respect to deaths occurring on or before December 31, 1996.
(c) (1) Section 101 of the Internal Revenue Code, as modified by
subdivision (b), is modified to additionally provide that Section 101
(i) of the Internal Revenue Code shall apply to any astronaut whose
death occurs in the line of duty.
(2) The amendments made to this section by Chapter 552 of the
Statutes of 2004 shall apply to amounts received in taxable years
beginning after December 31, 2002, with respect to deaths occurring
after that date.
(d) Section 101(j) of the Internal Revenue Code, relating to the
treatment of certain employer-owned life insurance contracts, shall
apply in accordance with the provisions of Section 863 of the Pension
Protection Act of 2006 (Public Law 109-280), relating to effective
dates, except that the phrase "January 1, 2010," shall be substituted
for "the date of the enactment of this Act" contained therein.
17132.6. A payment under paragraph (10) of subsection (c) of
Section 103 of the Ricky Ray Hemophilia Relief Fund Act of 1998 (42
U.S.C. Sec. 300c-22) to an individual shall be treated for purposes
of this part, Part 10.2 (commencing with Section 18401), and Part 11
(commencing with Section 23001) as damages described in Section 104
(a)(2) of the Internal Revenue Code.
17132.7. A payment under Section 103(c)(10) of the Ricky Ray
Hemophilia Relief Fund Act of 1998 (Public Law 105-369) to an
individual shall be treated for purposes of this part, Part 10.2
(commencing with Section 18401) and Part 11 (commencing with Section
23001) as damages described in Section 104(a)(2) of the Internal
Revenue Code.
17132.8. (a) For purposes of this part, Part 10.2 (commencing with
Section 18401), and Part 11 (commencing with Section 23001), gross
income shall not include any amount received from the Virginia
Polytechnic Institute and State University, out of amounts
transferred from the Hokie Spirit Memorial Fund established by the
Virginia Tech Foundation, an organization organized and operated as
described in Section 501(c)(3) of the Internal Revenue Code, if that
amount is paid on account of the events on April 16, 2007, at that
university.
(b) This section shall apply without regard to taxable year.
17133. Income which this state is prohibited from taxing includes
interest on bonds issued by this state or a local government in this
state, and the determination of whether a bond is issued by this
state or a local government in this state shall be made without
regard to (a) the source of payment of that bond or the security for
that bond, public or private, and (b) whether or not public
improvements are financed. If there is at any time following the
original issuance of such a bond a separation in ownership between
the bond and any right to receive interest on the bond (whether or
not evidenced by a coupon), payments or accruals on that stripped
bond and stripped coupon shall be treated in a manner consistent with
Section 1286(d) of the Internal Revenue Code.
17133.5. The following phrase (or its substantial equivalent) in
other codes or statutes does not exempt the gain or loss from the
sale or transfer of bonds from the provisions of this part:
"The issuance, transfer and interest income earned on any bonds
issued by an agency (state or local) under this article (chapter,
section, etc.) is exempt from taxation of every kind by any state or
local entity."
17134. Any loan made pursuant to the Forgivable Loan Program of the
California State University shall be deemed to be a student loan
within the meaning of Section 108(f)(2) of the Internal Revenue Code,
and Section 108(f)(1) shall apply to any discharge of the loan that
is made in connection with the borrower's performance of services for
the California State University.
17135. The use of an automobile by a special agent of federal or
state taxing agencies shall be treated in the manner provided for by
Section 1567 of Public Law 99-514.
17135.5. (a) Gross income does not include cost-share payments
received by forest landowners from the Department of Forestry and
Fire Protection pursuant to the California Forest Improvement Act of
1978 (Part 2.5 (commencing with Section 4790) of Division 1 of the
Public Resources Code) or from the United States Department of
Agriculture, Forest Service, under the Forest Stewardship Program and
the Stewardship Incentives Program, pursuant to the Cooperative
Forestry Assistance Act, as amended (Public Law 101-624).
(b) The amount of any cost-share payment excluded pursuant to
subdivision (a) shall not be considered with regard to either of the
following:
(1) Determining the basis of property acquired or improved.
(2) Computing any allowable deduction to which the taxpayer may
otherwise be entitled.
17136. Section 1078 of Public Law 98-369 (Tax Reform Act of 1984),
relating to exclusions from gross income of payments from the United
States Forest Service as a result of restricting motorized traffic in
the Boundary Waters Canoe Area, shall apply, with the following
exceptions:
(a) Section 1078(f)(2) of that act shall not be applicable.
(b) This section shall be effective only for payments made in
taxable years beginning on or after January 1, 1985.
17138. Any amount received as a rebate or voucher from a local
water or energy agency or supplier for any expenses the taxpayer paid
or incurred for the purchase or installation of any of the following
devices shall be treated as a refund or price adjustment of amounts
payable to that water or energy agency or supplier:
(a) A water conservation water closet that meets the performance
standards of American National Standards Institute Standard A112.19.2
and uses no more than 1.6 gallons per flush, or for the installation
of a urinal that meets the performance standards of American
National Standards Institute Standard A112.19.2 and uses no more than
one gallon per flush.
(b) A water and energy efficient clothes washer that meets a 1.04
modified energy factor and 9.5 water use efficiency factor as
determined by the State Energy Resources and Conservation Commission.
(c) A plumbing device necessary to serve the recycled water uses
described in Sections 13553 and 13554 of the Water Code.
17138.1. Gross income does not include any amount received as a
rebate, voucher, or other financial incentive issued by the
California Energy Commission, the Public Utility Commission, or a
local publicly owned electric utility, as defined in subdivision (d)
of Section 9604 of the Public Utilities Code, for any expenses paid
or incurred by a taxpayer for the purchase or installation of any of
the following devices:
(a) A thermal system as defined in Section 25600 of the Public
Resources Code.
(b) A solar system as defined in Section 25600 of the Public
Resources Code.
(c) A wind energy system device that produces electricity.
(d) A fuel cell generating system, as described in the California
Energy Commission's Emerging Renewable Resources Account Guidebook,
that produces electricity.
17139.5. For taxpayers who were not allowed to deduct the vehicle
smog impact fee imposed by Section 6262 when paid or incurred, any
interest paid by this state in conjunction with the refund of the
smog impact fee shall be excluded from gross income.
17139.6. Section 139A of the Internal Revenue Code, relating to
federal subsidies for prescription drug plans, shall not apply.
17140. (a) For purposes of this section, the following terms have
the following meanings as provided in the Golden State Scholarshare
Trust Act (Article 19 (commencing with Section 69980) of Chapter 2 of
Part 42 of the Education Code):
(1) "Beneficiary" has the meaning set forth in subdivision (c) of
Section 69980 of the Education Code.
(2) "Benefit" has the meaning set forth in subdivision (d) of
Section 69980 of the Education Code.
(3) "Participant" has the meaning set forth in subdivision (h) of
Section 69980 of the Education Code.
(4) "Participation agreement" has the meaning set forth in
subdivision (i) of Section 69980 of the Education Code.
(5) "Scholarshare trust" has the meaning set forth in subdivision
(f) of Section 69980 of the Education Code.
(b) For taxable years beginning on or after January 1, 1998, and
before January 1, 2002, except as otherwise provided in subdivision
(c), gross income of a beneficiary or a participant does not include
any of the following:
(1) Any distribution or earnings under a Scholarshare trust
participation agreement, as provided in Article 19 (commencing with
Section 69980) of Chapter 2 of Part 42 of the Education Code.
(2) Any contribution to the Scholarshare trust on behalf of a
beneficiary shall not be includable as gross income of that
beneficiary.
(c) For taxable years beginning on or after January 1, 1998, and
before January 1, 2002:
(1) Any distribution under a Scholarshare trust participation
agreement shall be includable in the gross income of the distributee
in the manner as provided under Section 72 of the Internal Revenue
Code, as modified by Section 17085, to the extent not excluded from
gross income under this part. For purposes of applying Section 72 of
the Internal Revenue Code, the following apply:
(A) All Scholarshare trust accounts of which an individual is a
beneficiary shall be treated as one account, except as otherwise
provided.
(B) All distributions during a taxable year shall be treated as
one distribution.
(C) The value of the participation agreement, income on the
participation agreement, and investment in the participation
agreement shall be computed as of the close of the calendar year in
which the taxable year begins.
(2) A contribution by a for-profit or nonprofit entity, or by a
state or local government agency, for the benefit of an owner or
employee of that entity or a beneficiary whom the owner or employee
has the power to designate, including the owner or employee's minor
children, shall be included in the gross income of that owner or
employee in the year the contribution is made.
(3) For purposes of this subdivision, "distribution" includes any
benefit furnished to a beneficiary under a participation agreement,
as provided in Article 19 (commencing with Section 69980) of Chapter
2 of Part 42 of the Education Code.
(4) (A) Paragraph (1) shall not apply to that portion of any
distribution that, within 60 days of distribution, is transferred to
the credit of another beneficiary under the Scholarshare trust who is
a "member of the family," as that term is used in Section 529(e)(2)
of the Internal Revenue Code, as amended by Section 211 of the
Taxpayer Relief Act of 1997 (P.L. 105-34), of the former beneficiary
of that Scholarshare trust.
(B) Any change in the beneficiary of an interest in the
Scholarshare trust shall not be treated as a distribution for
purposes of paragraph (1) if the new beneficiary is a "member of the
family," as that term is used in Section 529(e)(2) of the Internal
Revenue Code, as amended by Section 211 of the Taxpayer Relief Act of
1997 (P.L. 105-34), of the former beneficiary of that Scholarshare
trust.
(d) For taxable years beginning on or after January 1, 2002,
Sections 529(c) and 529(e) of the Internal Revenue Code, relating to
tax treatment of designated beneficiaries and contributors and to
other definitions and special rules, respectively, shall apply,
except as otherwise provided in Part 11 (commencing with Section
23001) and this part.
17140.3. Section 529 of the Internal Revenue Code, relating to
qualified state tuition programs, shall apply, except as otherwise
provided.
(a) Section 529 (a) of the Internal Revenue Code is modified as
follows:
(1) By substituting the phrase "under this part and Part 11
(commencing with Section 23001)" in lieu of the phrase "under this
subtitle."
(2) By substituting "Article 2 (commencing with Section 23731)" in
lieu of "Section 511."
(b) A copy of the report required to be filed with the Secretary
of the Treasury under Section 529(d) of the Internal Revenue Code
shall be filed with the Franchise Tax Board at the same time and in
the same manner as specified in that section.
17140.5. (a) Pursuant to Section 206 of the Servicemembers Civil
Relief Act (50 U.S.C. Appen. Sec. 526), the period of a servicemember'
s military service may not be included in computing any period
limited by law, regulation, or order for the bringing of any action
or proceeding under this part, Part 10.2 (commencing with Section
18401), or Part 11 (commencing with Section 23001), by or against the
servicemember or the servicemember's heirs, executors,
administrators, or assigns.
(b) Section 19521 is modified to provide that, pursuant to Section
207 of the Servicemembers Civil Relief Act (50 U.S.C. Appen. Sec.
527), the maximum rate of interest on any underpayment incurred by a
servicemember, or the servicemember and the servicemember's spouse
jointly, before the servicemember enters military service may not
bear interest at a rate in excess of 6 percent per year during the
period of military service.
(c) Pursuant to Section 511 of the Servicemembers Civil Relief Act
(50 U.S.C. Appen. Sec. 571):
(1) A servicemember not domiciled in this state does not become a
resident of this state by reason of being present in this state
solely in compliance with military orders.
(2) Compensation for military service of a servicemember not
domiciled in this state is not income for services performed or from
sources within this state.
(3) The military compensation of a servicemember not domiciled in
this state may not be used to increase the tax liability imposed on
other income of that servicemember or that servicemember's spouse.
(4) A Native American servicemember whose legal residence or
domicile is a federal Indian reservation shall be treated as living
on the federal Indian reservation and the compensation of that
servicemember for military service shall be deemed to be income
derived wholly from federal Indian reservation sources.
(d) For purposes of this part and Part 10.2 (commencing with
Section 18401), in the case of a servicemember not domiciled in this
state, all of the following shall apply:
(1) Compensation for military service shall not be included in any
of the following:
(A) Gross income of that servicemember or the spouse of that
servicemember.
(B) "Entire taxable income" for purposes of computing the tax
imposed under subdivision (b) or (d) of Section 17041.
(C) "Alternative minimum taxable income" for purposes of computing
tax imposed under subparagraph (B) of paragraph (3) of subdivision
(b) of Section 17062.
(2) Paragraph (2) of subdivision (h) of Section 17024.5 is
modified to provide that references to "adjusted gross income" for
purposes of computing limitations based upon adjusted gross income,
shall mean the amount required to be shown as adjusted gross income
on the federal tax return for the same taxable year reduced by the
amount of the compensation for military service for that taxable year
of a servicemember not domiciled in this state.
(e) (1) "Federal Indian reservation," "servicemember," "military
service," "period of military service," and "compensation for
military service" shall have the same meanings as applicable for
purposes of the Servicemembers Civil Relief Act (50 U.S.C. Appen.
Sec. 501 et seq.).
(2) "Native American" has the same meaning as the term "Indian"
for purposes of applying Section 511(e) of the Servicemembers Civil
Relief Act (50 U.S.C. Appen. Sec. 571(e)) for federal purposes.
(f) The amendments made to this section by the act adding this
subdivision shall apply to any taxable year for which the period for
making assessments or allowing a claim for refund or credit has not
expired as of December 19, 2003.
17142. Sections 111(b) and 111(c) of the Internal Revenue Code,
relating to credits and treatment of credit carryovers, shall be
applicable with respect to credits allowable under this part.
17142.5. (a) For purposes of the following provisions of the
Internal Revenue Code, a qualified hazardous duty area shall be
treated in the same manner as if it were a combat zone (as determined
under Section 112 of the Internal Revenue Code):
(1) Section 2 (a)(3) (relating to a special rule where a deceased
spouse was in missing status).
(2) Section 112 (relating to certain combat zone compensation of
members of the Armed Forces).
(3) Section 692 (relating to income taxes of members of Armed
Forces upon death).
(4) Section 7508 (relating to time for performing certain acts
postponed by reason of service in combat zone).
(b) "Qualified hazardous duty area" means Bosnia and Herzegovina,
Croatia, or Macedonia, if, as of March 20, 1996, any member of the
Armed Forces of the United States is entitled to special pay under
Section 310 of Title 37 of the United States Code (relating to
special pay; duty subject to hostile fire or imminent danger) for
services performed in that country. "Qualified hazardous duty area"
includes any country only during the period that entitlement is in
effect. Solely for purposes of applying Section 7508 of the Internal
Revenue Code, in the case of an individual who is performing services
as part of Operation Joint Endeavor outside the United States while
deployed away from the individual's permanent duty station, the term
"qualified hazardous duty area" includes, during the period for which
that entitlement is in effect, any area in which those services are
performed.
17143. Sections 103 and 141 to 150, inclusive, of the Internal
Revenue Code, relating to interest on governmental obligations, shall
not apply.
17144. (a) Section 108(b)(2)(B) of the Internal Revenue Code,
relating to general business credit, is modified by substituting
"this part" in lieu of "Section 38 (relating to general business
credit)."
(b) Section 108(b)(2)(G) of the Internal Revenue Code, relating to
foreign tax credit carryovers, shall not apply.
(c) Section 108(b)(3)(B) of the Internal Revenue Code, relating to
credit carryover reduction, is modified by substituting "11.1 cents"
in lieu of "33 1/3 cents" in each place in which it appears. In the
case where more than one credit is allowable under this part, the
credits shall be reduced on a pro rata basis.
(d) Section 108(g)(3)(B) of the Internal Revenue Code, relating to
adjusted tax attributes, is modified by substituting "($9)" in lieu
of "($3)."
(e) (1) If a taxpayer makes an election for federal income tax
purposes under Section 108(c) of the Internal Revenue Code, relating
to treatment of discharge of qualified real property business
indebtedness, a separate election shall not be allowed under
paragraph (3) of subdivision (e) of Section 17024.5 and the federal
election shall be binding for purposes of this part.
(2) If a taxpayer has not made an election for federal income tax
purposes under Section 108(c) of the Internal Revenue Code, relating
to treatment of discharge of qualified real property business
indebtedness, then the taxpayer shall not be allowed to make that
election for purposes of this part.
17144.5. (a) Section 108(a)(1)(E) of the Internal Revenue Code, is
modified to provide that the amount excluded from gross income shall
not exceed $500,000 ($250,000 in the case of a married individual
filing a separate return).
(b) Section 108(h)(2) of the Internal Revenue Code, is modified by
substituting the phrase "(within the meaning of section 163(h)(3)
(B), applied by substituting '$800,000 ($400,000' for '$1,000,000
($500,000' in clause (ii) thereof)" for the phrase "(within the
meaning of section 163(h)(3)(B), applied by substituting '$2,000,000
($1,000,000' for '$1,000,000 ($500,000' in clause (ii) thereof)"
contained therein.
(c) This section shall apply to discharges of indebtedness
occurring on or after January 1, 2007, and, notwithstanding any other
law to the contrary, no penalties or interest shall be due with
respect to the discharge of qualified principal residence
indebtedness during the 2007 or 2009 taxable year regardless of
whether or not the taxpayer reports the discharge on his or her
return for the 2007 or 2009 taxable year.
17145. (a) A management company, or series thereof, is qualified to
pay exempt-interest dividends to its shareholders if, at the close
of each quarter of its taxable year, at least 50 percent of the value
of its total assets consists of obligations which, when held by an
individual, the interest therefrom is exempt from taxation by this
state.
(b) For purposes of this section:
(1) "Exempt-interest dividend" means any dividend or part thereof
paid by a management company or series thereof in an amount not
exceeding the interest received by it during its taxable year on
obligations that, when held by an individual, the interest therefrom
is exempt from taxation by this state, and designated by it as an
exempt-interest dividend in a written notice mailed to its
shareholders not later than 60 days after the close of its taxable
year. If the aggregate amount so designated with respect to a taxable
year of the company (including exempt-interest dividends paid after
the close of the taxable year as described in Section 855 of the
Internal Revenue Code) is greater than the excess of:
(A) The amount of interest received by it during its taxable year
on obligations, interest on which, if held by an individual, is
exempt from taxation by this state, over
(B) The amounts that, if it were treated as an individual, would
be disallowed as deductions under Section 17280 of this part or
Section 171(a)(2) of the Internal Revenue Code, the portion of that
distribution that shall constitute an exempt-interest dividend shall
be only that proportion of the amount so designated as the amount of
that excess for that taxable year bears to the amount so designated.
(2) "Management company" means a regulated investment company as
defined by Section 851 of the Internal Revenue Code.
(3) "Series" means a segregated portfolio of assets, the
beneficial interest in which is owned by the holders of a class or
series of stock of the management company that is preferred over all
other classes or series with respect to that portfolio of assets.
(4) "Value" means, with respect to securities (other than those of
majority-owned subsidiaries) for which market quotations are readily
available, the market value of those securities; and with respect to
other securities and assets, fair market value as determined in good
faith by the board of directors or trustees, except that in the case
of securities of majority-owned subsidiaries that are investment
companies, as defined in the Investment Company Act of 1940, that
fair value shall not exceed market value or asset value, whichever is
higher.
(c) An exempt-interest dividend shall be treated by recipients
thereof as an item of interest excludable from income.
17146. The compensation of employees of a foreign country shall be
determined in accordance with Section 893 of the Internal Revenue
Code.
17147.7. (a) Gross income does not include any income which is
received as a reward from a crime hotline that is authorized by any
governmental entity.
(b) For the purposes of this section, "crime hotline" means any
method of direct communication established by a government agency or
a private, nonprofit organization exempt from taxation under Section
23701d for the purpose of permitting individuals to report criminal
activity to that agency or organization, or any other designated
government agency.
(c) This section shall not apply to an employee of an agency or
organization establishing or operating a crime hotline or to an
employee of an organization that has contributed to the reward
described in subdivision (a).
17149. (a) Gross income does not include compensation or the fair
market value of any other benefit, except salary or wages, received
by an employee from an employer for participation in any ridesharing
arrangement in California, including those specified in subdivision
(b).
(b) For purposes of this section, compensation or the fair market
value of any other benefit received for participation in a
ridesharing arrangement in California includes compensation or other
benefit received for:
(1) Commuting in a vanpool.
(2) Commuting in a private commuter bus or buspool.
(3) A transit pass for use by the employee or his or her
dependents, other than transit passes for use by elementary and
secondary school students who are dependents of the employee.
(4) Commuting in a subscription taxipool.
(5) Commuting in a carpool.
(6) Free or subsidized parking.
(7) An employee's bicycling to or from his or her place of
employment.
(8) Commuting by ferry.
(9) The use of an alternative transportation method, other than a
method otherwise specified in this subdivision, that reduces the use
of a motor vehicle by a single occupant to travel to or from that
individual's place of employment.
(10) Travel to or from a telecommuting facility.
(c) For purposes of this section:
(1) "Vanpool" means seven or more persons commuting on a daily
basis to and from work by means of a vehicle with a seating
arrangement designed to carry 7 to 15 adults, including the driver,
that is used to transport those persons who commute to and from work
on a regular basis.
(2) "Transit pass" means any purchase of transit rides that
entitles the holder to any number of transit rides to and from the
workplace, whether at a discount rate or the base fare rate.
(3) "Transit" means transportation service for use by the general
public that utilizes buses, railcars, or ferries with a seating
capacity of 16 or more persons.
(4) "Subscription taxipool" means a type of service in which
employers or groups of employees contract with a public or private
taxi operator to provide daily commuter service for a group of
preassembled subscribers on a prepaid or daily fare basis following a
relatively fixed route and schedule tailored to meet the needs of
the subscribers.
(5) "Ridesharing arrangement" means the transportation of persons
in a motor vehicle where that transportation is incidental to another
purpose of the driver. The term includes ridesharing arrangements
known as carpools, vanpools, and buspools.
(6) "Carpool" means two or more persons commuting on a daily basis
to and from work by means of a vehicle with a seating arrangement
designed to carry less than seven adults, including the driver.
(7) "Buspool" means 16 or more persons commuting on a daily basis
to and from work by means of a vehicle with a seating arrangement
designed to carry more than 15 adult passengers.
(8) "Private commuter bus" means a highway vehicle which meets all
of the following criteria:
(A) Has a seating capacity of at least seven adults, including the
driver.
(B) At least 50 percent of the mileage of which can be reasonably
expected to be used for the purpose of transporting employees to and
from work.
(C) Is acquired by the taxpayer on or after the date of enactment
of this section.
(D) With respect to which the taxpayer makes an election under
this paragraph on his or her return for the taxable year in which the
vehicle is placed in service.
(9) "Free or subsidized parking" means the benefit received from
an employer for parking while participating in a ridesharing
arrangement within California.
(10) "Alternative commute program" means any alternative
transportation method or program the purpose of which is to reduce
the use of a motor vehicle by a single occupant to travel to and from
that individual's place of employment.
17151. (a) Gross income of an employee does not include any
amounts, not exceeding an aggregate amount of five thousand two
hundred fifty dollars ($5,250) per calendar year, that is paid or
incurred by the employer for educational assistance to the employee
pursuant to an educational assistance program.
(b) For purposes of this section, the following definitions shall
apply:
(1) "Educational assistance" means the payment by an employer of
expenses incurred by or on behalf of an employee for the employee's
education, and includes, but is not limited to, payments for books,
supplies, equipment, tuition, and fees, and similar payments.
"Educational assistance" includes the provision by an employer of
courses of instruction for an employee, including the provision of
books, supplies, and equipment. "Educational assistance" does not
include any payment for, or the provision of, any of the following:
(A) Any tools or supplies that may be retained by the employee
after completion of a course of instruction.
(B) Any meals, lodging, or transportation.
(C) Any course or education involving sports, games, or hobbies.
(D) Any course or education taken at the graduate level of a kind
normally taken by an individual pursuing a program leading to a law,
business, medical, or other advanced academic or professional degree.
This subparagraph applies only to any course or education taken at
the graduate level beginning after June 30, 1996, and before January
1, 2000.
(2) "Educational assistance program" means a separate written plan
of an employer for the exclusive benefit of his or her employees to
provide those employees with educational assistance. The program
shall meet the following requirements:
(A) The program benefits employees who qualify under a
classification established by the employer and found by the Franchise
Tax Board not to be discriminatory in favor of employees who are
highly compensated employees (within the meaning of Section 414(q) of
the Internal Revenue Code) or their dependents. For purposes of this
subparagraph, there shall be excluded from consideration employees
who are not included in the program and who are included in a unit of
employees covered by an agreement that the Franchise Tax Board finds
to be a collective bargaining agreement between employee
representatives and one or more employers, if there is evidence that
educational assistance benefits were the subject of good faith
bargaining between the employee representatives and the employer or
employers.
(B) Not more than 5 percent of the amounts paid or incurred by the
employer for educational assistance during the year may be provided
for the class of individuals who are owners (or their spouses or
dependents), each of whom, on any day of the year, owns more than 5
percent of the capital or profits interest in the employer.
(C) The program does not provide eligible employees with a choice
between educational assistance and other remuneration includable in
gross income. For purposes of this section, the business practices of
the employer, as well as the written program, shall be taken into
account.
(D) The program need not be funded.
(E) Reasonable notification of the availability and terms of the
program is provided to eligible employees.
(3) "Employee" includes self-employed individuals within the
meaning of Section 401(c)(1) of the Internal Revenue Code.
(c) For purposes of this section:
(1) Any individual who owns the entire interest in an
unincorporated trade or business shall be treated as his or her own
employee.
(2) A partnership shall be treated as the employer of each partner
who is an employee within the meaning of paragraph (3) of
subdivision (b).
(3) (A) An educational assistance program shall not be considered
to fail to meet any of the requirements of paragraph (2) of
subdivision (b) on the sole basis of either of the following:
(i) Different utilization rates for the different types of
educational assistance made available under the program.
(ii) Successful completion or attainment of a particular course
grade is required for or considered in determining reimbursement
under the program.
(B) This section shall not be construed to affect the deduction or
inclusion in income of amounts that are paid or incurred or received
as reimbursement for educational expenses under Section 117, 162, or
212 of the Internal Revenue Code.
(d) No deduction or credit shall be allowed to the employee with
respect to any amount that the employee excludes from income pursuant
to this section.
(e) Section 127 of the Internal Revenue Code shall not apply.
(f) This section shall apply with respect to expenses relating to
courses beginning after June 30, 1996.
17152. Section 121 of the Internal Revenue Code, relating to
exclusion of gain from sale of principal residence, is modified as
follows:
(a) The two-year period in Section 121(a) of the Internal Revenue
Code shall be reduced by the period of the taxpayer's service, not to
exceed 18 months, in the Peace Corps during the five-year period
ending on the date of the sale or exchange.
(b) If the taxpayer is prohibited from filing a joint return
pursuant to Section 18521, Section 121(b)(2)(A) of the Internal
Revenue Code shall nevertheless be treated as being satisfied if the
taxpayer files a joint return for federal income tax purposes for the
same taxable year. However, in no instance shall the total amount
excludable from gross income under Section 121(a) of the Internal
Revenue Code with respect to any sale or exchange exceed the maximum
amount allowed by Section 121(b) of the Internal Revenue Code.
(c) (1) If a taxpayer has, at any time, made an election for
federal purposes under Section 121(f) of the Internal Revenue Code
not to have Section 121 of the Internal Revenue Code apply to a sale
or exchange, Section 121 of the Internal Revenue Code shall not apply
to that sale or exchange for state purposes, a separate election for
state purposes shall not be allowed under paragraph (3) of
subdivision (e) of Section 17024.5, the federal election shall be
binding for purposes of this part, and that election shall be treated
as an election to include in gross income for purposes of this part
all the gain from the sale or exchange of that property, including
that amount which, but for that election, would have been excluded
from income under Section 121(a) of the Internal Revenue Code for
state purposes.
(2) If a taxpayer fails to make an election for federal purposes
under Section 121(f) of the Internal Revenue Code to not have Section
121 of the Internal Revenue Code apply to a sale or exchange, no
election under Section 121(f) of the Internal Revenue Code shall be
allowed for state purposes, Section 121 of the Internal Revenue Code
shall apply to that sale or exchange for state purposes, and a
separate election for state purposes shall not be allowed under
paragraph (3) of subdivision (e) of Section 17024.5.
(d) (1) If a taxpayer has, at any time, made an election for
federal purposes under Section 312(d)(2) of the Taxpayer Relief Act
of 1997 (Public Law 105-34), relating to sales before date of
enactment, or Section 312(d)(4) of that act, relating to binding
contracts, to not have the amendments made by Section 312 of the
Taxpayer Relief Act of 1997 (Public Law 105-34) apply to a sale or
exchange, the amendments made by the act adding this subdivision
shall not apply to that sale or exchange, Sections 1, 4, and 6 of
Chapter 610 of the Statutes of 1997 shall not apply to that sale or
exchange, a separate election for state purposes shall not be allowed
under paragraph (3) of subdivision (e) of Section 17024.5, and the
federal election shall be binding for purposes of this part.
(2) If a taxpayer fails to make an election for federal purposes
under Section 312(d)(2) of the Taxpayer Relief Act of 1997 (Public
Law 105-34), relating to sales before date of enactment, or Section
312(d)(4) of that act, relating to binding contracts, to not have the
amendments made by Section 312 of the Taxpayer Relief Act of 1997
(Public Law 105-34) apply to a sale or exchange, an election under
Section 312(d)(2) of the Taxpayer Relief Act of 1997 (Public Law
105-34), relating to sales before date of enactment, or Section 312
(d)(4) of that act, relating to binding contracts, shall not be
allowed for state purposes, the amendments made by the act adding
this subdivision shall apply to that sale or exchange, Sections 1, 4,
and 6 of Chapter 610 of the Statutes of 1997 shall apply to that
sale or exchange, and a separate election for state purposes shall
not be allowed under paragraph (3) of subdivision (e) of Section
17024.5.
(e) (1) If a taxpayer has, at any time, made or revoked an
election for federal purposes under Section 121(d)(9) of the Internal
Revenue Code to suspend the running of the five-year period
described in Sections 121(a), 121(c)(1)(B), and 121(d)(7) of the
Internal Revenue Code, that election or revocation of election to
suspend the five-year period under Section 121(d)(9) of the Internal
Revenue Code shall be applicable for state purposes, a separate
election or revocation of election for purposes of Section 121(d)(9)
of the Internal Revenue Code may not be allowed under paragraph (3)
of subdivision (e) of Section 17024.5, and the federal election or
revocation of election shall be binding for purposes of this part.
(2) If a taxpayer fails to make an election for federal purposes
under Section 121(d)(9) of the Internal Revenue Code to suspend the
running of the five-year period described in Sections 121(a), 121(c)
(1)(B), and 121(d)(7) of the Internal Revenue Code, that five-year
period may not be suspended under Section 121(d)(9) of the Internal
Revenue Code for state purposes, and a separate election for state
purposes shall not be allowed under paragraph (3) of subdivision (e)
of Section 17024.5.
(f) Section 121(d)(11) of the Internal Revenue Code, relating to
property acquired from a decedent, shall not apply.
(g) The amendments made by Section 417 of the Tax Relief and
Health Care Act of 2006 (Public Law 109-432) to Section 121(d)(9) of
the Internal Revenue Code, relating to uniformed services, foreign
service, and intelligence community, shall apply to sales or
exchanges that occur on or after January 1, 2010.
(h) The amendments made by subdivision (a) of Section 7 of the
Mortgage Forgiveness Debt Relief Act of 2007 (Public Law 110-142) to
Section 121 of the Internal Revenue Code, relating to exclusion of
gain from sale of principal residence, shall apply to sales or
exchanges that occur on or after January 1, 2010.
17153.5. Gross income does not include any amount received for
empty beverage containers by a consumer from a recycling center or
recycling location as the recycling value, as defined in Chapter 2
(commencing with Section 14502) of Division 12.1 of the Public
Resources Code.
17154. Section 132(j)(8) of the Internal Revenue Code, relating to
application of section to otherwise taxable educational or training
benefits, is modified by substituting "which are not excludable under
Section 17151" in lieu of "which are not excludable under Section
127".
17155. (a) Gross income shall not include any amount, including any
interest or property, that is received as compensation in any
taxable year by a taxpayer pursuant to the German Act Regulating
Unresolved Property Claims, as amended (Gesetz zur Regelung offener
Vermogensfragen).
(b) The basis of any property received pursuant to the German Act
Regulating Unresolved Property Claims shall be the fair market value
of the property at the time of receipt by the taxpayer.
17155. Gross income shall not include either of the following:
(a) (1) Any amount, including any interest or property, that is
received as compensation in any taxable year by a taxpayer pursuant
to the German Act Regulating Unresolved Property Claims, as amended
(Gesetz zur Regelung offener Vermogensfragen).
(2) For purposes of this subdivision, the basis of any property
received pursuant to the German Act Regulating Unresolved Property
Claims shall be the fair market value of the property at the time of
receipt by the taxpayer.
(b) (1) Any amount received by a taxpayer who is a Holocaust
victim or the heir or beneficiary of a Holocaust victim as a result
of a settlement of claims against any entity or individual for any
recovered asset.
(2) For purposes of this subdivision:
(A) "Holocaust victim" means a person who was persecuted by Nazi
Germany or any Axis regime during any period from 1933 to 1945,
inclusive.
(B) "Recovered asset" means any asset of any type, including any
bank deposits, insurance proceeds, or artwork owned by a Holocaust
victim during any period from 1920 to 1945, inclusive, withheld from
that Holocaust victim or his or her heirs or beneficiaries from and
after 1945, and not recovered, returned, or otherwise compensated to
a Holocaust victim or his or her heirs or beneficiaries until 1995,
or thereafter. "Recovered asset" shall also include any interest
earned on any of these assets.
17155.5. Gross income does not include any amount received as
reparation payments paid by the German Foundation known as
Remembrance, Responsibility, and the Future, or any other source of
humanitarian reparations made for purposes of redressing the
injustice done to persons who were required to perform slave or
forced labor during World War II.
17156. (a) Gross income shall not include any amount received as
compensation in any taxable year by a taxpayer pursuant to Assembly
Bill 110 of the 1999-2000 Regular Session.
(b) This section shall apply to taxable years beginning on or
after January 1, 1999.
17156.5. Gross income does not include any amount received as
reparation payments paid by the Canadian government for the purpose
of redressing the injustice done to persons of Japanese ancestry who
were interned in Canada during World War II.
17157. Gross income shall not include any amount received in any
taxable year by a claimant pursuant to Section 4904 of the Penal
Code.
17131. Part III of Subchapter B of Chapter 1 of Subtitle A of the
Internal Revenue Code, relating to items that are specifically
excluded from gross income, shall apply, except as otherwise
provided.
17131.1. (a) Gross income does not include any excludable
restitution payments received by an eligible individual (or the
individual's heirs or estate) and any excludable interest.
(b) For purposes of this section:
(1) The basis of any property received by an eligible individual
(or the individual's heirs or estate) as part of an excludable
restitution payment shall be the fair market value of that property
as of the time of the receipt.
(2) "Eligible individual" means a person who was persecuted on the
basis of race, religion, physical or mental disability, or sexual
orientation by Nazi Germany, any other Axis regime, or any other
Nazi-controlled or Nazi-allied country.
(3) "Excludable restitution payment" means any payment or
distribution to an individual (or the individual's heirs or estate)
that is any of the following:
(A) Is payable by reason of the individual's status as an eligible
individual, including any amount payable by any foreign country, the
United States of America, or any other foreign or domestic entity,
or a fund established by any such country or entity, any amount
payable as a result of a final resolution of a legal action, and any
amount payable under a law providing for payments or restitution of
property.
(B) Constitutes the direct or indirect return of, or compensation
or reparation for, assets stolen or hidden from, or otherwise lost
to, the individual before, during, or immediately after World War II
by reason of the individual's status as an eligible individual,
including any proceeds of insurance under policies issued on eligible
individuals by European insurance companies immediately before and
during World War II.
(C) Consists of interest which is payable as part of any payment
or distribution described in subparagraph (A) or (B).
(4) "Excludable interest" means any interest earned by any of the
following:
(A) Escrow accounts or settlement funds established pursuant to
the settlement of the action entitled "In re: Holocaust Victim Assets
Litigation," (E.D.N.Y.) C.A. No. 96-4849.
(B) Funds to benefit eligible individuals or their heirs created
by the International Commission on Holocaust Insurance Claims as a
result of the Agreement between the Government of the United States
of America and the Government of the Federal Republic of Germany
concerning the Foundation "Remembrance, Responsibility, and Future,"
dated July 17, 2000.
(C) Similar funds subject to the administration of the United
States courts created to provide excludable restitution payments to
eligible individuals (or eligible individuals' heirs or estates).
(c) (1) This section shall apply to any amount received on or
after January 1, 2000.
(2) Nothing in this section shall be construed to create any
inference with respect to the proper tax treatment of any amount
received before January 1, 2000.
17131.2. (a) Gross income does not include any excludable
settlement payments received by an eligible individual (or the
individual's heirs or estate) and any excludable interest.
(b) For purposes of this section:
(1) The basis of any property received by an eligible individual
(or the individual's heirs or estate) as part of an excludable
settlement payment shall be the fair market value of that property as
of the time of the receipt.
(2) "Eligible individual" means a person who was persecuted on the
basis of race or religion by the regime that was in control of the
Ottoman Turkish Empire from 1915 through 1923.
(3) "Excludable settlement payment" means any payment or
distribution to an individual (or the individual's heirs or estate)
that is any of the following:
(A) Is payable by reason of the individual's status as an eligible
individual, including any amount payable by any foreign or domestic
entity or a fund established by any entity, any amount payable as a
result of a final resolution of a legal action, and any amount
payable under a law providing for payments or restitution of
property.
(B) Constitutes compensation to the individual from 1915 until
1923, by reason of the individual's status as an eligible individual,
including any proceeds of insurance under policies issued on
eligible individuals immediately before 1915 and during the time
period from 1915 until 1923.
(C) Consists of interest that is payable as part of any payment or
distribution described in subparagraph (A) or (B).
(4) "Excludable interest" means any interest earned by any of the
following:
(A) A fund to benefit eligible individuals or their heirs created
by an international commission or an international organization.
(B) A fund subject to the administration of the United States
courts created to provide excludable settlement payments to eligible
individuals (or eligible individuals' heirs or estates).
(c) (1) This section applies to any amount received on or after
January 1, 2005.
(2) This section may not be construed to create any inference with
respect to the proper tax treatment of any amount received before
January 1, 2005.
17131.3. Any grant made in any taxable year by the Secretary of the
Treasury under Section 1603 of the American Recovery and
Reinvestment Tax Act of 2009 (Public Law 111-5) to a person that
places in service specified energy property shall not be includable
in the gross income or the alternative minimum taxable income of the
taxpayer, but shall be taken into account in determining the basis of
the property to which that grant relates, except that the basis of
that property shall be reduced using rules prescribed under Section
50(c) of the Internal Revenue Code in the same manner as a credit
allowed under Section 48(a) of the Internal Revenue Code, and
adjusted in accordance with rules applied by the Secretary of the
Treasury under Section 1603(f) of the American Recovery and
Reinvestment Tax Act of 2009 (Public Law 111-5).
17131.4. Section 106(d) of the Internal Revenue Code, relating to
contributions to health savings accounts, shall not apply.
17131.5. Section 125(d)(2)(D) of the Internal Revenue Code,
relating to the exception for health savings accounts, shall not
apply.
17131.6. Section 107 of the Internal Revenue Code is modified by
substituting in paragraph (2) the phrase "the rental allowance paid
to him or her as part of his or her compensation, to the extent used
by him or her to rent or provide a home" in lieu of the phrase "the
rental allowance paid to him as part of his compensation, to the
extent used by him to rent or provide a home and to the extent such
allowance does not exceed the fair rental value of the home,
including furnishings and appurtenances such as a garage, plus the
cost of utilities" contained therein.
17131.9. Gross income does not include any supplementary payment
received by an individual pursuant to Section 12306.6 of the Welfare
and Institutions Code.
17132. Section 114 of the Internal Revenue Code, relating to
extraterritorial income, shall not apply.
17132. Section 114 of the Internal Revenue Code, relating to
extraterritorial income, shall not apply.
17132.4. (a) For taxable years beginning on or after January 1,
2005, gross income does not include the death benefits received by an
eligible individual.
(b) For purposes of this section:
(1) "Death benefit" means the entire amount of the death benefit
payment made pursuant to Chapter 3.5 (commencing with Section 850) of
Division 4 of the Military and Veterans Code.
(2) "Eligible individual" means the surviving spouse of, or a
beneficiary designated by, any member of the California National
Guard, State Military Reserve, or Naval Militia who dies or is killed
in the performance of duty, as provided in Section 850 of the
Military and Veterans Code.
17132.5. Section 101 of the Internal Revenue Code, relating to
certain death benefits, is modified as follows:
(a) Section 101(h) of the Internal Revenue Code, relating to
survivor benefits attributable to service by a public safety officer
who is killed in the line of duty, is modified to apply to amounts
received in taxable years beginning after December 31, 1996, with
respect to individuals dying after December 31, 1996.
(b) (1) Section 101 of the Internal Revenue Code, as modified by
subdivision (a) is modified to additionally provide that Section 101
(h) of the Internal Revenue Code shall not apply to survivor benefits
attributable to service by a public safety officer who is killed in
the line of duty with respect to deaths occurring before December 31,
1996, that would otherwise be eligible for exclusion pursuant to
Section 101(h) of the Internal Revenue Code, as modified by Public
Law 107-15.
(2) The amendments made to this section by Chapter 691 of the
Statutes of 2005 shall apply to amounts paid after December 31, 2001,
with respect to deaths occurring on or before December 31, 1996.
(c) (1) Section 101 of the Internal Revenue Code, as modified by
subdivision (b), is modified to additionally provide that Section 101
(i) of the Internal Revenue Code shall apply to any astronaut whose
death occurs in the line of duty.
(2) The amendments made to this section by Chapter 552 of the
Statutes of 2004 shall apply to amounts received in taxable years
beginning after December 31, 2002, with respect to deaths occurring
after that date.
(d) Section 101(j) of the Internal Revenue Code, relating to the
treatment of certain employer-owned life insurance contracts, shall
apply in accordance with the provisions of Section 863 of the Pension
Protection Act of 2006 (Public Law 109-280), relating to effective
dates, except that the phrase "January 1, 2010," shall be substituted
for "the date of the enactment of this Act" contained therein.
17132.6. A payment under paragraph (10) of subsection (c) of
Section 103 of the Ricky Ray Hemophilia Relief Fund Act of 1998 (42
U.S.C. Sec. 300c-22) to an individual shall be treated for purposes
of this part, Part 10.2 (commencing with Section 18401), and Part 11
(commencing with Section 23001) as damages described in Section 104
(a)(2) of the Internal Revenue Code.
17132.7. A payment under Section 103(c)(10) of the Ricky Ray
Hemophilia Relief Fund Act of 1998 (Public Law 105-369) to an
individual shall be treated for purposes of this part, Part 10.2
(commencing with Section 18401) and Part 11 (commencing with Section
23001) as damages described in Section 104(a)(2) of the Internal
Revenue Code.
17132.8. (a) For purposes of this part, Part 10.2 (commencing with
Section 18401), and Part 11 (commencing with Section 23001), gross
income shall not include any amount received from the Virginia
Polytechnic Institute and State University, out of amounts
transferred from the Hokie Spirit Memorial Fund established by the
Virginia Tech Foundation, an organization organized and operated as
described in Section 501(c)(3) of the Internal Revenue Code, if that
amount is paid on account of the events on April 16, 2007, at that
university.
(b) This section shall apply without regard to taxable year.
17133. Income which this state is prohibited from taxing includes
interest on bonds issued by this state or a local government in this
state, and the determination of whether a bond is issued by this
state or a local government in this state shall be made without
regard to (a) the source of payment of that bond or the security for
that bond, public or private, and (b) whether or not public
improvements are financed. If there is at any time following the
original issuance of such a bond a separation in ownership between
the bond and any right to receive interest on the bond (whether or
not evidenced by a coupon), payments or accruals on that stripped
bond and stripped coupon shall be treated in a manner consistent with
Section 1286(d) of the Internal Revenue Code.
17133.5. The following phrase (or its substantial equivalent) in
other codes or statutes does not exempt the gain or loss from the
sale or transfer of bonds from the provisions of this part:
"The issuance, transfer and interest income earned on any bonds
issued by an agency (state or local) under this article (chapter,
section, etc.) is exempt from taxation of every kind by any state or
local entity."
17134. Any loan made pursuant to the Forgivable Loan Program of the
California State University shall be deemed to be a student loan
within the meaning of Section 108(f)(2) of the Internal Revenue Code,
and Section 108(f)(1) shall apply to any discharge of the loan that
is made in connection with the borrower's performance of services for
the California State University.
17135. The use of an automobile by a special agent of federal or
state taxing agencies shall be treated in the manner provided for by
Section 1567 of Public Law 99-514.
17135.5. (a) Gross income does not include cost-share payments
received by forest landowners from the Department of Forestry and
Fire Protection pursuant to the California Forest Improvement Act of
1978 (Part 2.5 (commencing with Section 4790) of Division 1 of the
Public Resources Code) or from the United States Department of
Agriculture, Forest Service, under the Forest Stewardship Program and
the Stewardship Incentives Program, pursuant to the Cooperative
Forestry Assistance Act, as amended (Public Law 101-624).
(b) The amount of any cost-share payment excluded pursuant to
subdivision (a) shall not be considered with regard to either of the
following:
(1) Determining the basis of property acquired or improved.
(2) Computing any allowable deduction to which the taxpayer may
otherwise be entitled.
17136. Section 1078 of Public Law 98-369 (Tax Reform Act of 1984),
relating to exclusions from gross income of payments from the United
States Forest Service as a result of restricting motorized traffic in
the Boundary Waters Canoe Area, shall apply, with the following
exceptions:
(a) Section 1078(f)(2) of that act shall not be applicable.
(b) This section shall be effective only for payments made in
taxable years beginning on or after January 1, 1985.
17138. Any amount received as a rebate or voucher from a local
water or energy agency or supplier for any expenses the taxpayer paid
or incurred for the purchase or installation of any of the following
devices shall be treated as a refund or price adjustment of amounts
payable to that water or energy agency or supplier:
(a) A water conservation water closet that meets the performance
standards of American National Standards Institute Standard A112.19.2
and uses no more than 1.6 gallons per flush, or for the installation
of a urinal that meets the performance standards of American
National Standards Institute Standard A112.19.2 and uses no more than
one gallon per flush.
(b) A water and energy efficient clothes washer that meets a 1.04
modified energy factor and 9.5 water use efficiency factor as
determined by the State Energy Resources and Conservation Commission.
(c) A plumbing device necessary to serve the recycled water uses
described in Sections 13553 and 13554 of the Water Code.
17138.1. Gross income does not include any amount received as a
rebate, voucher, or other financial incentive issued by the
California Energy Commission, the Public Utility Commission, or a
local publicly owned electric utility, as defined in subdivision (d)
of Section 9604 of the Public Utilities Code, for any expenses paid
or incurred by a taxpayer for the purchase or installation of any of
the following devices:
(a) A thermal system as defined in Section 25600 of the Public
Resources Code.
(b) A solar system as defined in Section 25600 of the Public
Resources Code.
(c) A wind energy system device that produces electricity.
(d) A fuel cell generating system, as described in the California
Energy Commission's Emerging Renewable Resources Account Guidebook,
that produces electricity.
17139.5. For taxpayers who were not allowed to deduct the vehicle
smog impact fee imposed by Section 6262 when paid or incurred, any
interest paid by this state in conjunction with the refund of the
smog impact fee shall be excluded from gross income.
17139.6. Section 139A of the Internal Revenue Code, relating to
federal subsidies for prescription drug plans, shall not apply.
17140. (a) For purposes of this section, the following terms have
the following meanings as provided in the Golden State Scholarshare
Trust Act (Article 19 (commencing with Section 69980) of Chapter 2 of
Part 42 of the Education Code):
(1) "Beneficiary" has the meaning set forth in subdivision (c) of
Section 69980 of the Education Code.
(2) "Benefit" has the meaning set forth in subdivision (d) of
Section 69980 of the Education Code.
(3) "Participant" has the meaning set forth in subdivision (h) of
Section 69980 of the Education Code.
(4) "Participation agreement" has the meaning set forth in
subdivision (i) of Section 69980 of the Education Code.
(5) "Scholarshare trust" has the meaning set forth in subdivision
(f) of Section 69980 of the Education Code.
(b) For taxable years beginning on or after January 1, 1998, and
before January 1, 2002, except as otherwise provided in subdivision
(c), gross income of a beneficiary or a participant does not include
any of the following:
(1) Any distribution or earnings under a Scholarshare trust
participation agreement, as provided in Article 19 (commencing with
Section 69980) of Chapter 2 of Part 42 of the Education Code.
(2) Any contribution to the Scholarshare trust on behalf of a
beneficiary shall not be includable as gross income of that
beneficiary.
(c) For taxable years beginning on or after January 1, 1998, and
before January 1, 2002:
(1) Any distribution under a Scholarshare trust participation
agreement shall be includable in the gross income of the distributee
in the manner as provided under Section 72 of the Internal Revenue
Code, as modified by Section 17085, to the extent not excluded from
gross income under this part. For purposes of applying Section 72 of
the Internal Revenue Code, the following apply:
(A) All Scholarshare trust accounts of which an individual is a
beneficiary shall be treated as one account, except as otherwise
provided.
(B) All distributions during a taxable year shall be treated as
one distribution.
(C) The value of the participation agreement, income on the
participation agreement, and investment in the participation
agreement shall be computed as of the close of the calendar year in
which the taxable year begins.
(2) A contribution by a for-profit or nonprofit entity, or by a
state or local government agency, for the benefit of an owner or
employee of that entity or a beneficiary whom the owner or employee
has the power to designate, including the owner or employee's minor
children, shall be included in the gross income of that owner or
employee in the year the contribution is made.
(3) For purposes of this subdivision, "distribution" includes any
benefit furnished to a beneficiary under a participation agreement,
as provided in Article 19 (commencing with Section 69980) of Chapter
2 of Part 42 of the Education Code.
(4) (A) Paragraph (1) shall not apply to that portion of any
distribution that, within 60 days of distribution, is transferred to
the credit of another beneficiary under the Scholarshare trust who is
a "member of the family," as that term is used in Section 529(e)(2)
of the Internal Revenue Code, as amended by Section 211 of the
Taxpayer Relief Act of 1997 (P.L. 105-34), of the former beneficiary
of that Scholarshare trust.
(B) Any change in the beneficiary of an interest in the
Scholarshare trust shall not be treated as a distribution for
purposes of paragraph (1) if the new beneficiary is a "member of the
family," as that term is used in Section 529(e)(2) of the Internal
Revenue Code, as amended by Section 211 of the Taxpayer Relief Act of
1997 (P.L. 105-34), of the former beneficiary of that Scholarshare
trust.
(d) For taxable years beginning on or after January 1, 2002,
Sections 529(c) and 529(e) of the Internal Revenue Code, relating to
tax treatment of designated beneficiaries and contributors and to
other definitions and special rules, respectively, shall apply,
except as otherwise provided in Part 11 (commencing with Section
23001) and this part.
17140.3. Section 529 of the Internal Revenue Code, relating to
qualified state tuition programs, shall apply, except as otherwise
provided.
(a) Section 529 (a) of the Internal Revenue Code is modified as
follows:
(1) By substituting the phrase "under this part and Part 11
(commencing with Section 23001)" in lieu of the phrase "under this
subtitle."
(2) By substituting "Article 2 (commencing with Section 23731)" in
lieu of "Section 511."
(b) A copy of the report required to be filed with the Secretary
of the Treasury under Section 529(d) of the Internal Revenue Code
shall be filed with the Franchise Tax Board at the same time and in
the same manner as specified in that section.
17140.5. (a) Pursuant to Section 206 of the Servicemembers Civil
Relief Act (50 U.S.C. Appen. Sec. 526), the period of a servicemember'
s military service may not be included in computing any period
limited by law, regulation, or order for the bringing of any action
or proceeding under this part, Part 10.2 (commencing with Section
18401), or Part 11 (commencing with Section 23001), by or against the
servicemember or the servicemember's heirs, executors,
administrators, or assigns.
(b) Section 19521 is modified to provide that, pursuant to Section
207 of the Servicemembers Civil Relief Act (50 U.S.C. Appen. Sec.
527), the maximum rate of interest on any underpayment incurred by a
servicemember, or the servicemember and the servicemember's spouse
jointly, before the servicemember enters military service may not
bear interest at a rate in excess of 6 percent per year during the
period of military service.
(c) Pursuant to Section 511 of the Servicemembers Civil Relief Act
(50 U.S.C. Appen. Sec. 571):
(1) A servicemember not domiciled in this state does not become a
resident of this state by reason of being present in this state
solely in compliance with military orders.
(2) Compensation for military service of a servicemember not
domiciled in this state is not income for services performed or from
sources within this state.
(3) The military compensation of a servicemember not domiciled in
this state may not be used to increase the tax liability imposed on
other income of that servicemember or that servicemember's spouse.
(4) A Native American servicemember whose legal residence or
domicile is a federal Indian reservation shall be treated as living
on the federal Indian reservation and the compensation of that
servicemember for military service shall be deemed to be income
derived wholly from federal Indian reservation sources.
(d) For purposes of this part and Part 10.2 (commencing with
Section 18401), in the case of a servicemember not domiciled in this
state, all of the following shall apply:
(1) Compensation for military service shall not be included in any
of the following:
(A) Gross income of that servicemember or the spouse of that
servicemember.
(B) "Entire taxable income" for purposes of computing the tax
imposed under subdivision (b) or (d) of Section 17041.
(C) "Alternative minimum taxable income" for purposes of computing
tax imposed under subparagraph (B) of paragraph (3) of subdivision
(b) of Section 17062.
(2) Paragraph (2) of subdivision (h) of Section 17024.5 is
modified to provide that references to "adjusted gross income" for
purposes of computing limitations based upon adjusted gross income,
shall mean the amount required to be shown as adjusted gross income
on the federal tax return for the same taxable year reduced by the
amount of the compensation for military service for that taxable year
of a servicemember not domiciled in this state.
(e) (1) "Federal Indian reservation," "servicemember," "military
service," "period of military service," and "compensation for
military service" shall have the same meanings as applicable for
purposes of the Servicemembers Civil Relief Act (50 U.S.C. Appen.
Sec. 501 et seq.).
(2) "Native American" has the same meaning as the term "Indian"
for purposes of applying Section 511(e) of the Servicemembers Civil
Relief Act (50 U.S.C. Appen. Sec. 571(e)) for federal purposes.
(f) The amendments made to this section by the act adding this
subdivision shall apply to any taxable year for which the period for
making assessments or allowing a claim for refund or credit has not
expired as of December 19, 2003.
17142. Sections 111(b) and 111(c) of the Internal Revenue Code,
relating to credits and treatment of credit carryovers, shall be
applicable with respect to credits allowable under this part.
17142.5. (a) For purposes of the following provisions of the
Internal Revenue Code, a qualified hazardous duty area shall be
treated in the same manner as if it were a combat zone (as determined
under Section 112 of the Internal Revenue Code):
(1) Section 2 (a)(3) (relating to a special rule where a deceased
spouse was in missing status).
(2) Section 112 (relating to certain combat zone compensation of
members of the Armed Forces).
(3) Section 692 (relating to income taxes of members of Armed
Forces upon death).
(4) Section 7508 (relating to time for performing certain acts
postponed by reason of service in combat zone).
(b) "Qualified hazardous duty area" means Bosnia and Herzegovina,
Croatia, or Macedonia, if, as of March 20, 1996, any member of the
Armed Forces of the United States is entitled to special pay under
Section 310 of Title 37 of the United States Code (relating to
special pay; duty subject to hostile fire or imminent danger) for
services performed in that country. "Qualified hazardous duty area"
includes any country only during the period that entitlement is in
effect. Solely for purposes of applying Section 7508 of the Internal
Revenue Code, in the case of an individual who is performing services
as part of Operation Joint Endeavor outside the United States while
deployed away from the individual's permanent duty station, the term
"qualified hazardous duty area" includes, during the period for which
that entitlement is in effect, any area in which those services are
performed.
17143. Sections 103 and 141 to 150, inclusive, of the Internal
Revenue Code, relating to interest on governmental obligations, shall
not apply.
17144. (a) Section 108(b)(2)(B) of the Internal Revenue Code,
relating to general business credit, is modified by substituting
"this part" in lieu of "Section 38 (relating to general business
credit)."
(b) Section 108(b)(2)(G) of the Internal Revenue Code, relating to
foreign tax credit carryovers, shall not apply.
(c) Section 108(b)(3)(B) of the Internal Revenue Code, relating to
credit carryover reduction, is modified by substituting "11.1 cents"
in lieu of "33 1/3 cents" in each place in which it appears. In the
case where more than one credit is allowable under this part, the
credits shall be reduced on a pro rata basis.
(d) Section 108(g)(3)(B) of the Internal Revenue Code, relating to
adjusted tax attributes, is modified by substituting "($9)" in lieu
of "($3)."
(e) (1) If a taxpayer makes an election for federal income tax
purposes under Section 108(c) of the Internal Revenue Code, relating
to treatment of discharge of qualified real property business
indebtedness, a separate election shall not be allowed under
paragraph (3) of subdivision (e) of Section 17024.5 and the federal
election shall be binding for purposes of this part.
(2) If a taxpayer has not made an election for federal income tax
purposes under Section 108(c) of the Internal Revenue Code, relating
to treatment of discharge of qualified real property business
indebtedness, then the taxpayer shall not be allowed to make that
election for purposes of this part.
17144.5. (a) Section 108(a)(1)(E) of the Internal Revenue Code, is
modified to provide that the amount excluded from gross income shall
not exceed $500,000 ($250,000 in the case of a married individual
filing a separate return).
(b) Section 108(h)(2) of the Internal Revenue Code, is modified by
substituting the phrase "(within the meaning of section 163(h)(3)
(B), applied by substituting '$800,000 ($400,000' for '$1,000,000
($500,000' in clause (ii) thereof)" for the phrase "(within the
meaning of section 163(h)(3)(B), applied by substituting '$2,000,000
($1,000,000' for '$1,000,000 ($500,000' in clause (ii) thereof)"
contained therein.
(c) This section shall apply to discharges of indebtedness
occurring on or after January 1, 2007, and, notwithstanding any other
law to the contrary, no penalties or interest shall be due with
respect to the discharge of qualified principal residence
indebtedness during the 2007 or 2009 taxable year regardless of
whether or not the taxpayer reports the discharge on his or her
return for the 2007 or 2009 taxable year.
17145. (a) A management company, or series thereof, is qualified to
pay exempt-interest dividends to its shareholders if, at the close
of each quarter of its taxable year, at least 50 percent of the value
of its total assets consists of obligations which, when held by an
individual, the interest therefrom is exempt from taxation by this
state.
(b) For purposes of this section:
(1) "Exempt-interest dividend" means any dividend or part thereof
paid by a management company or series thereof in an amount not
exceeding the interest received by it during its taxable year on
obligations that, when held by an individual, the interest therefrom
is exempt from taxation by this state, and designated by it as an
exempt-interest dividend in a written notice mailed to its
shareholders not later than 60 days after the close of its taxable
year. If the aggregate amount so designated with respect to a taxable
year of the company (including exempt-interest dividends paid after
the close of the taxable year as described in Section 855 of the
Internal Revenue Code) is greater than the excess of:
(A) The amount of interest received by it during its taxable year
on obligations, interest on which, if held by an individual, is
exempt from taxation by this state, over
(B) The amounts that, if it were treated as an individual, would
be disallowed as deductions under Section 17280 of this part or
Section 171(a)(2) of the Internal Revenue Code, the portion of that
distribution that shall constitute an exempt-interest dividend shall
be only that proportion of the amount so designated as the amount of
that excess for that taxable year bears to the amount so designated.
(2) "Management company" means a regulated investment company as
defined by Section 851 of the Internal Revenue Code.
(3) "Series" means a segregated portfolio of assets, the
beneficial interest in which is owned by the holders of a class or
series of stock of the management company that is preferred over all
other classes or series with respect to that portfolio of assets.
(4) "Value" means, with respect to securities (other than those of
majority-owned subsidiaries) for which market quotations are readily
available, the market value of those securities; and with respect to
other securities and assets, fair market value as determined in good
faith by the board of directors or trustees, except that in the case
of securities of majority-owned subsidiaries that are investment
companies, as defined in the Investment Company Act of 1940, that
fair value shall not exceed market value or asset value, whichever is
higher.
(c) An exempt-interest dividend shall be treated by recipients
thereof as an item of interest excludable from income.
17146. The compensation of employees of a foreign country shall be
determined in accordance with Section 893 of the Internal Revenue
Code.
17147.7. (a) Gross income does not include any income which is
received as a reward from a crime hotline that is authorized by any
governmental entity.
(b) For the purposes of this section, "crime hotline" means any
method of direct communication established by a government agency or
a private, nonprofit organization exempt from taxation under Section
23701d for the purpose of permitting individuals to report criminal
activity to that agency or organization, or any other designated
government agency.
(c) This section shall not apply to an employee of an agency or
organization establishing or operating a crime hotline or to an
employee of an organization that has contributed to the reward
described in subdivision (a).
17149. (a) Gross income does not include compensation or the fair
market value of any other benefit, except salary or wages, received
by an employee from an employer for participation in any ridesharing
arrangement in California, including those specified in subdivision
(b).
(b) For purposes of this section, compensation or the fair market
value of any other benefit received for participation in a
ridesharing arrangement in California includes compensation or other
benefit received for:
(1) Commuting in a vanpool.
(2) Commuting in a private commuter bus or buspool.
(3) A transit pass for use by the employee or his or her
dependents, other than transit passes for use by elementary and
secondary school students who are dependents of the employee.
(4) Commuting in a subscription taxipool.
(5) Commuting in a carpool.
(6) Free or subsidized parking.
(7) An employee's bicycling to or from his or her place of
employment.
(8) Commuting by ferry.
(9) The use of an alternative transportation method, other than a
method otherwise specified in this subdivision, that reduces the use
of a motor vehicle by a single occupant to travel to or from that
individual's place of employment.
(10) Travel to or from a telecommuting facility.
(c) For purposes of this section:
(1) "Vanpool" means seven or more persons commuting on a daily
basis to and from work by means of a vehicle with a seating
arrangement designed to carry 7 to 15 adults, including the driver,
that is used to transport those persons who commute to and from work
on a regular basis.
(2) "Transit pass" means any purchase of transit rides that
entitles the holder to any number of transit rides to and from the
workplace, whether at a discount rate or the base fare rate.
(3) "Transit" means transportation service for use by the general
public that utilizes buses, railcars, or ferries with a seating
capacity of 16 or more persons.
(4) "Subscription taxipool" means a type of service in which
employers or groups of employees contract with a public or private
taxi operator to provide daily commuter service for a group of
preassembled subscribers on a prepaid or daily fare basis following a
relatively fixed route and schedule tailored to meet the needs of
the subscribers.
(5) "Ridesharing arrangement" means the transportation of persons
in a motor vehicle where that transportation is incidental to another
purpose of the driver. The term includes ridesharing arrangements
known as carpools, vanpools, and buspools.
(6) "Carpool" means two or more persons commuting on a daily basis
to and from work by means of a vehicle with a seating arrangement
designed to carry less than seven adults, including the driver.
(7) "Buspool" means 16 or more persons commuting on a daily basis
to and from work by means of a vehicle with a seating arrangement
designed to carry more than 15 adult passengers.
(8) "Private commuter bus" means a highway vehicle which meets all
of the following criteria:
(A) Has a seating capacity of at least seven adults, including the
driver.
(B) At least 50 percent of the mileage of which can be reasonably
expected to be used for the purpose of transporting employees to and
from work.
(C) Is acquired by the taxpayer on or after the date of enactment
of this section.
(D) With respect to which the taxpayer makes an election under
this paragraph on his or her return for the taxable year in which the
vehicle is placed in service.
(9) "Free or subsidized parking" means the benefit received from
an employer for parking while participating in a ridesharing
arrangement within California.
(10) "Alternative commute program" means any alternative
transportation method or program the purpose of which is to reduce
the use of a motor vehicle by a single occupant to travel to and from
that individual's place of employment.
17151. (a) Gross income of an employee does not include any
amounts, not exceeding an aggregate amount of five thousand two
hundred fifty dollars ($5,250) per calendar year, that is paid or
incurred by the employer for educational assistance to the employee
pursuant to an educational assistance program.
(b) For purposes of this section, the following definitions shall
apply:
(1) "Educational assistance" means the payment by an employer of
expenses incurred by or on behalf of an employee for the employee's
education, and includes, but is not limited to, payments for books,
supplies, equipment, tuition, and fees, and similar payments.
"Educational assistance" includes the provision by an employer of
courses of instruction for an employee, including the provision of
books, supplies, and equipment. "Educational assistance" does not
include any payment for, or the provision of, any of the following:
(A) Any tools or supplies that may be retained by the employee
after completion of a course of instruction.
(B) Any meals, lodging, or transportation.
(C) Any course or education involving sports, games, or hobbies.
(D) Any course or education taken at the graduate level of a kind
normally taken by an individual pursuing a program leading to a law,
business, medical, or other advanced academic or professional degree.
This subparagraph applies only to any course or education taken at
the graduate level beginning after June 30, 1996, and before January
1, 2000.
(2) "Educational assistance program" means a separate written plan
of an employer for the exclusive benefit of his or her employees to
provide those employees with educational assistance. The program
shall meet the following requirements:
(A) The program benefits employees who qualify under a
classification established by the employer and found by the Franchise
Tax Board not to be discriminatory in favor of employees who are
highly compensated employees (within the meaning of Section 414(q) of
the Internal Revenue Code) or their dependents. For purposes of this
subparagraph, there shall be excluded from consideration employees
who are not included in the program and who are included in a unit of
employees covered by an agreement that the Franchise Tax Board finds
to be a collective bargaining agreement between employee
representatives and one or more employers, if there is evidence that
educational assistance benefits were the subject of good faith
bargaining between the employee representatives and the employer or
employers.
(B) Not more than 5 percent of the amounts paid or incurred by the
employer for educational assistance during the year may be provided
for the class of individuals who are owners (or their spouses or
dependents), each of whom, on any day of the year, owns more than 5
percent of the capital or profits interest in the employer.
(C) The program does not provide eligible employees with a choice
between educational assistance and other remuneration includable in
gross income. For purposes of this section, the business practices of
the employer, as well as the written program, shall be taken into
account.
(D) The program need not be funded.
(E) Reasonable notification of the availability and terms of the
program is provided to eligible employees.
(3) "Employee" includes self-employed individuals within the
meaning of Section 401(c)(1) of the Internal Revenue Code.
(c) For purposes of this section:
(1) Any individual who owns the entire interest in an
unincorporated trade or business shall be treated as his or her own
employee.
(2) A partnership shall be treated as the employer of each partner
who is an employee within the meaning of paragraph (3) of
subdivision (b).
(3) (A) An educational assistance program shall not be considered
to fail to meet any of the requirements of paragraph (2) of
subdivision (b) on the sole basis of either of the following:
(i) Different utilization rates for the different types of
educational assistance made available under the program.
(ii) Successful completion or attainment of a particular course
grade is required for or considered in determining reimbursement
under the program.
(B) This section shall not be construed to affect the deduction or
inclusion in income of amounts that are paid or incurred or received
as reimbursement for educational expenses under Section 117, 162, or
212 of the Internal Revenue Code.
(d) No deduction or credit shall be allowed to the employee with
respect to any amount that the employee excludes from income pursuant
to this section.
(e) Section 127 of the Internal Revenue Code shall not apply.
(f) This section shall apply with respect to expenses relating to
courses beginning after June 30, 1996.
17152. Section 121 of the Internal Revenue Code, relating to
exclusion of gain from sale of principal residence, is modified as
follows:
(a) The two-year period in Section 121(a) of the Internal Revenue
Code shall be reduced by the period of the taxpayer's service, not to
exceed 18 months, in the Peace Corps during the five-year period
ending on the date of the sale or exchange.
(b) If the taxpayer is prohibited from filing a joint return
pursuant to Section 18521, Section 121(b)(2)(A) of the Internal
Revenue Code shall nevertheless be treated as being satisfied if the
taxpayer files a joint return for federal income tax purposes for the
same taxable year. However, in no instance shall the total amount
excludable from gross income under Section 121(a) of the Internal
Revenue Code with respect to any sale or exchange exceed the maximum
amount allowed by Section 121(b) of the Internal Revenue Code.
(c) (1) If a taxpayer has, at any time, made an election for
federal purposes under Section 121(f) of the Internal Revenue Code
not to have Section 121 of the Internal Revenue Code apply to a sale
or exchange, Section 121 of the Internal Revenue Code shall not apply
to that sale or exchange for state purposes, a separate election for
state purposes shall not be allowed under paragraph (3) of
subdivision (e) of Section 17024.5, the federal election shall be
binding for purposes of this part, and that election shall be treated
as an election to include in gross income for purposes of this part
all the gain from the sale or exchange of that property, including
that amount which, but for that election, would have been excluded
from income under Section 121(a) of the Internal Revenue Code for
state purposes.
(2) If a taxpayer fails to make an election for federal purposes
under Section 121(f) of the Internal Revenue Code to not have Section
121 of the Internal Revenue Code apply to a sale or exchange, no
election under Section 121(f) of the Internal Revenue Code shall be
allowed for state purposes, Section 121 of the Internal Revenue Code
shall apply to that sale or exchange for state purposes, and a
separate election for state purposes shall not be allowed under
paragraph (3) of subdivision (e) of Section 17024.5.
(d) (1) If a taxpayer has, at any time, made an election for
federal purposes under Section 312(d)(2) of the Taxpayer Relief Act
of 1997 (Public Law 105-34), relating to sales before date of
enactment, or Section 312(d)(4) of that act, relating to binding
contracts, to not have the amendments made by Section 312 of the
Taxpayer Relief Act of 1997 (Public Law 105-34) apply to a sale or
exchange, the amendments made by the act adding this subdivision
shall not apply to that sale or exchange, Sections 1, 4, and 6 of
Chapter 610 of the Statutes of 1997 shall not apply to that sale or
exchange, a separate election for state purposes shall not be allowed
under paragraph (3) of subdivision (e) of Section 17024.5, and the
federal election shall be binding for purposes of this part.
(2) If a taxpayer fails to make an election for federal purposes
under Section 312(d)(2) of the Taxpayer Relief Act of 1997 (Public
Law 105-34), relating to sales before date of enactment, or Section
312(d)(4) of that act, relating to binding contracts, to not have the
amendments made by Section 312 of the Taxpayer Relief Act of 1997
(Public Law 105-34) apply to a sale or exchange, an election under
Section 312(d)(2) of the Taxpayer Relief Act of 1997 (Public Law
105-34), relating to sales before date of enactment, or Section 312
(d)(4) of that act, relating to binding contracts, shall not be
allowed for state purposes, the amendments made by the act adding
this subdivision shall apply to that sale or exchange, Sections 1, 4,
and 6 of Chapter 610 of the Statutes of 1997 shall apply to that
sale or exchange, and a separate election for state purposes shall
not be allowed under paragraph (3) of subdivision (e) of Section
17024.5.
(e) (1) If a taxpayer has, at any time, made or revoked an
election for federal purposes under Section 121(d)(9) of the Internal
Revenue Code to suspend the running of the five-year period
described in Sections 121(a), 121(c)(1)(B), and 121(d)(7) of the
Internal Revenue Code, that election or revocation of election to
suspend the five-year period under Section 121(d)(9) of the Internal
Revenue Code shall be applicable for state purposes, a separate
election or revocation of election for purposes of Section 121(d)(9)
of the Internal Revenue Code may not be allowed under paragraph (3)
of subdivision (e) of Section 17024.5, and the federal election or
revocation of election shall be binding for purposes of this part.
(2) If a taxpayer fails to make an election for federal purposes
under Section 121(d)(9) of the Internal Revenue Code to suspend the
running of the five-year period described in Sections 121(a), 121(c)
(1)(B), and 121(d)(7) of the Internal Revenue Code, that five-year
period may not be suspended under Section 121(d)(9) of the Internal
Revenue Code for state purposes, and a separate election for state
purposes shall not be allowed under paragraph (3) of subdivision (e)
of Section 17024.5.
(f) Section 121(d)(11) of the Internal Revenue Code, relating to
property acquired from a decedent, shall not apply.
(g) The amendments made by Section 417 of the Tax Relief and
Health Care Act of 2006 (Public Law 109-432) to Section 121(d)(9) of
the Internal Revenue Code, relating to uniformed services, foreign
service, and intelligence community, shall apply to sales or
exchanges that occur on or after January 1, 2010.
(h) The amendments made by subdivision (a) of Section 7 of the
Mortgage Forgiveness Debt Relief Act of 2007 (Public Law 110-142) to
Section 121 of the Internal Revenue Code, relating to exclusion of
gain from sale of principal residence, shall apply to sales or
exchanges that occur on or after January 1, 2010.
17153.5. Gross income does not include any amount received for
empty beverage containers by a consumer from a recycling center or
recycling location as the recycling value, as defined in Chapter 2
(commencing with Section 14502) of Division 12.1 of the Public
Resources Code.
17154. Section 132(j)(8) of the Internal Revenue Code, relating to
application of section to otherwise taxable educational or training
benefits, is modified by substituting "which are not excludable under
Section 17151" in lieu of "which are not excludable under Section
127".
17155. (a) Gross income shall not include any amount, including any
interest or property, that is received as compensation in any
taxable year by a taxpayer pursuant to the German Act Regulating
Unresolved Property Claims, as amended (Gesetz zur Regelung offener
Vermogensfragen).
(b) The basis of any property received pursuant to the German Act
Regulating Unresolved Property Claims shall be the fair market value
of the property at the time of receipt by the taxpayer.
17155. Gross income shall not include either of the following:
(a) (1) Any amount, including any interest or property, that is
received as compensation in any taxable year by a taxpayer pursuant
to the German Act Regulating Unresolved Property Claims, as amended
(Gesetz zur Regelung offener Vermogensfragen).
(2) For purposes of this subdivision, the basis of any property
received pursuant to the German Act Regulating Unresolved Property
Claims shall be the fair market value of the property at the time of
receipt by the taxpayer.
(b) (1) Any amount received by a taxpayer who is a Holocaust
victim or the heir or beneficiary of a Holocaust victim as a result
of a settlement of claims against any entity or individual for any
recovered asset.
(2) For purposes of this subdivision:
(A) "Holocaust victim" means a person who was persecuted by Nazi
Germany or any Axis regime during any period from 1933 to 1945,
inclusive.
(B) "Recovered asset" means any asset of any type, including any
bank deposits, insurance proceeds, or artwork owned by a Holocaust
victim during any period from 1920 to 1945, inclusive, withheld from
that Holocaust victim or his or her heirs or beneficiaries from and
after 1945, and not recovered, returned, or otherwise compensated to
a Holocaust victim or his or her heirs or beneficiaries until 1995,
or thereafter. "Recovered asset" shall also include any interest
earned on any of these assets.
17155.5. Gross income does not include any amount received as
reparation payments paid by the German Foundation known as
Remembrance, Responsibility, and the Future, or any other source of
humanitarian reparations made for purposes of redressing the
injustice done to persons who were required to perform slave or
forced labor during World War II.
17156. (a) Gross income shall not include any amount received as
compensation in any taxable year by a taxpayer pursuant to Assembly
Bill 110 of the 1999-2000 Regular Session.
(b) This section shall apply to taxable years beginning on or
after January 1, 1999.
17156.5. Gross income does not include any amount received as
reparation payments paid by the Canadian government for the purpose
of redressing the injustice done to persons of Japanese ancestry who
were interned in Canada during World War II.
17157. Gross income shall not include any amount received in any
taxable year by a claimant pursuant to Section 4904 of the Penal
Code.
17131. Part III of Subchapter B of Chapter 1 of Subtitle A of the
Internal Revenue Code, relating to items that are specifically
excluded from gross income, shall apply, except as otherwise
provided.
17131.1. (a) Gross income does not include any excludable
restitution payments received by an eligible individual (or the
individual's heirs or estate) and any excludable interest.
(b) For purposes of this section:
(1) The basis of any property received by an eligible individual
(or the individual's heirs or estate) as part of an excludable
restitution payment shall be the fair market value of that property
as of the time of the receipt.
(2) "Eligible individual" means a person who was persecuted on the
basis of race, religion, physical or mental disability, or sexual
orientation by Nazi Germany, any other Axis regime, or any other
Nazi-controlled or Nazi-allied country.
(3) "Excludable restitution payment" means any payment or
distribution to an individual (or the individual's heirs or estate)
that is any of the following:
(A) Is payable by reason of the individual's status as an eligible
individual, including any amount payable by any foreign country, the
United States of America, or any other foreign or domestic entity,
or a fund established by any such country or entity, any amount
payable as a result of a final resolution of a legal action, and any
amount payable under a law providing for payments or restitution of
property.
(B) Constitutes the direct or indirect return of, or compensation
or reparation for, assets stolen or hidden from, or otherwise lost
to, the individual before, during, or immediately after World War II
by reason of the individual's status as an eligible individual,
including any proceeds of insurance under policies issued on eligible
individuals by European insurance companies immediately before and
during World War II.
(C) Consists of interest which is payable as part of any payment
or distribution described in subparagraph (A) or (B).
(4) "Excludable interest" means any interest earned by any of the
following:
(A) Escrow accounts or settlement funds established pursuant to
the settlement of the action entitled "In re: Holocaust Victim Assets
Litigation," (E.D.N.Y.) C.A. No. 96-4849.
(B) Funds to benefit eligible individuals or their heirs created
by the International Commission on Holocaust Insurance Claims as a
result of the Agreement between the Government of the United States
of America and the Government of the Federal Republic of Germany
concerning the Foundation "Remembrance, Responsibility, and Future,"
dated July 17, 2000.
(C) Similar funds subject to the administration of the United
States courts created to provide excludable restitution payments to
eligible individuals (or eligible individuals' heirs or estates).
(c) (1) This section shall apply to any amount received on or
after January 1, 2000.
(2) Nothing in this section shall be construed to create any
inference with respect to the proper tax treatment of any amount
received before January 1, 2000.
17131.2. (a) Gross income does not include any excludable
settlement payments received by an eligible individual (or the
individual's heirs or estate) and any excludable interest.
(b) For purposes of this section:
(1) The basis of any property received by an eligible individual
(or the individual's heirs or estate) as part of an excludable
settlement payment shall be the fair market value of that property as
of the time of the receipt.
(2) "Eligible individual" means a person who was persecuted on the
basis of race or religion by the regime that was in control of the
Ottoman Turkish Empire from 1915 through 1923.
(3) "Excludable settlement payment" means any payment or
distribution to an individual (or the individual's heirs or estate)
that is any of the following:
(A) Is payable by reason of the individual's status as an eligible
individual, including any amount payable by any foreign or domestic
entity or a fund established by any entity, any amount payable as a
result of a final resolution of a legal action, and any amount
payable under a law providing for payments or restitution of
property.
(B) Constitutes compensation to the individual from 1915 until
1923, by reason of the individual's status as an eligible individual,
including any proceeds of insurance under policies issued on
eligible individuals immediately before 1915 and during the time
period from 1915 until 1923.
(C) Consists of interest that is payable as part of any payment or
distribution described in subparagraph (A) or (B).
(4) "Excludable interest" means any interest earned by any of the
following:
(A) A fund to benefit eligible individuals or their heirs created
by an international commission or an international organization.
(B) A fund subject to the administration of the United States
courts created to provide excludable settlement payments to eligible
individuals (or eligible individuals' heirs or estates).
(c) (1) This section applies to any amount received on or after
January 1, 2005.
(2) This section may not be construed to create any inference with
respect to the proper tax treatment of any amount received before
January 1, 2005.
17131.3. Any grant made in any taxable year by the Secretary of the
Treasury under Section 1603 of the American Recovery and
Reinvestment Tax Act of 2009 (Public Law 111-5) to a person that
places in service specified energy property shall not be includable
in the gross income or the alternative minimum taxable income of the
taxpayer, but shall be taken into account in determining the basis of
the property to which that grant relates, except that the basis of
that property shall be reduced using rules prescribed under Section
50(c) of the Internal Revenue Code in the same manner as a credit
allowed under Section 48(a) of the Internal Revenue Code, and
adjusted in accordance with rules applied by the Secretary of the
Treasury under Section 1603(f) of the American Recovery and
Reinvestment Tax Act of 2009 (Public Law 111-5).
17131.4. Section 106(d) of the Internal Revenue Code, relating to
contributions to health savings accounts, shall not apply.
17131.5. Section 125(d)(2)(D) of the Internal Revenue Code,
relating to the exception for health savings accounts, shall not
apply.
17131.6. Section 107 of the Internal Revenue Code is modified by
substituting in paragraph (2) the phrase "the rental allowance paid
to him or her as part of his or her compensation, to the extent used
by him or her to rent or provide a home" in lieu of the phrase "the
rental allowance paid to him as part of his compensation, to the
extent used by him to rent or provide a home and to the extent such
allowance does not exceed the fair rental value of the home,
including furnishings and appurtenances such as a garage, plus the
cost of utilities" contained therein.
17131.9. Gross income does not include any supplementary payment
received by an individual pursuant to Section 12306.6 of the Welfare
and Institutions Code.
17132. Section 114 of the Internal Revenue Code, relating to
extraterritorial income, shall not apply.
17132. Section 114 of the Internal Revenue Code, relating to
extraterritorial income, shall not apply.
17132.4. (a) For taxable years beginning on or after January 1,
2005, gross income does not include the death benefits received by an
eligible individual.
(b) For purposes of this section:
(1) "Death benefit" means the entire amount of the death benefit
payment made pursuant to Chapter 3.5 (commencing with Section 850) of
Division 4 of the Military and Veterans Code.
(2) "Eligible individual" means the surviving spouse of, or a
beneficiary designated by, any member of the California National
Guard, State Military Reserve, or Naval Militia who dies or is killed
in the performance of duty, as provided in Section 850 of the
Military and Veterans Code.
17132.5. Section 101 of the Internal Revenue Code, relating to
certain death benefits, is modified as follows:
(a) Section 101(h) of the Internal Revenue Code, relating to
survivor benefits attributable to service by a public safety officer
who is killed in the line of duty, is modified to apply to amounts
received in taxable years beginning after December 31, 1996, with
respect to individuals dying after December 31, 1996.
(b) (1) Section 101 of the Internal Revenue Code, as modified by
subdivision (a) is modified to additionally provide that Section 101
(h) of the Internal Revenue Code shall not apply to survivor benefits
attributable to service by a public safety officer who is killed in
the line of duty with respect to deaths occurring before December 31,
1996, that would otherwise be eligible for exclusion pursuant to
Section 101(h) of the Internal Revenue Code, as modified by Public
Law 107-15.
(2) The amendments made to this section by Chapter 691 of the
Statutes of 2005 shall apply to amounts paid after December 31, 2001,
with respect to deaths occurring on or before December 31, 1996.
(c) (1) Section 101 of the Internal Revenue Code, as modified by
subdivision (b), is modified to additionally provide that Section 101
(i) of the Internal Revenue Code shall apply to any astronaut whose
death occurs in the line of duty.
(2) The amendments made to this section by Chapter 552 of the
Statutes of 2004 shall apply to amounts received in taxable years
beginning after December 31, 2002, with respect to deaths occurring
after that date.
(d) Section 101(j) of the Internal Revenue Code, relating to the
treatment of certain employer-owned life insurance contracts, shall
apply in accordance with the provisions of Section 863 of the Pension
Protection Act of 2006 (Public Law 109-280), relating to effective
dates, except that the phrase "January 1, 2010," shall be substituted
for "the date of the enactment of this Act" contained therein.
17132.6. A payment under paragraph (10) of subsection (c) of
Section 103 of the Ricky Ray Hemophilia Relief Fund Act of 1998 (42
U.S.C. Sec. 300c-22) to an individual shall be treated for purposes
of this part, Part 10.2 (commencing with Section 18401), and Part 11
(commencing with Section 23001) as damages described in Section 104
(a)(2) of the Internal Revenue Code.
17132.7. A payment under Section 103(c)(10) of the Ricky Ray
Hemophilia Relief Fund Act of 1998 (Public Law 105-369) to an
individual shall be treated for purposes of this part, Part 10.2
(commencing with Section 18401) and Part 11 (commencing with Section
23001) as damages described in Section 104(a)(2) of the Internal
Revenue Code.
17132.8. (a) For purposes of this part, Part 10.2 (commencing with
Section 18401), and Part 11 (commencing with Section 23001), gross
income shall not include any amount received from the Virginia
Polytechnic Institute and State University, out of amounts
transferred from the Hokie Spirit Memorial Fund established by the
Virginia Tech Foundation, an organization organized and operated as
described in Section 501(c)(3) of the Internal Revenue Code, if that
amount is paid on account of the events on April 16, 2007, at that
university.
(b) This section shall apply without regard to taxable year.
17133. Income which this state is prohibited from taxing includes
interest on bonds issued by this state or a local government in this
state, and the determination of whether a bond is issued by this
state or a local government in this state shall be made without
regard to (a) the source of payment of that bond or the security for
that bond, public or private, and (b) whether or not public
improvements are financed. If there is at any time following the
original issuance of such a bond a separation in ownership between
the bond and any right to receive interest on the bond (whether or
not evidenced by a coupon), payments or accruals on that stripped
bond and stripped coupon shall be treated in a manner consistent with
Section 1286(d) of the Internal Revenue Code.
17133.5. The following phrase (or its substantial equivalent) in
other codes or statutes does not exempt the gain or loss from the
sale or transfer of bonds from the provisions of this part:
"The issuance, transfer and interest income earned on any bonds
issued by an agency (state or local) under this article (chapter,
section, etc.) is exempt from taxation of every kind by any state or
local entity."
17134. Any loan made pursuant to the Forgivable Loan Program of the
California State University shall be deemed to be a student loan
within the meaning of Section 108(f)(2) of the Internal Revenue Code,
and Section 108(f)(1) shall apply to any discharge of the loan that
is made in connection with the borrower's performance of services for
the California State University.
17135. The use of an automobile by a special agent of federal or
state taxing agencies shall be treated in the manner provided for by
Section 1567 of Public Law 99-514.
17135.5. (a) Gross income does not include cost-share payments
received by forest landowners from the Department of Forestry and
Fire Protection pursuant to the California Forest Improvement Act of
1978 (Part 2.5 (commencing with Section 4790) of Division 1 of the
Public Resources Code) or from the United States Department of
Agriculture, Forest Service, under the Forest Stewardship Program and
the Stewardship Incentives Program, pursuant to the Cooperative
Forestry Assistance Act, as amended (Public Law 101-624).
(b) The amount of any cost-share payment excluded pursuant to
subdivision (a) shall not be considered with regard to either of the
following:
(1) Determining the basis of property acquired or improved.
(2) Computing any allowable deduction to which the taxpayer may
otherwise be entitled.
17136. Section 1078 of Public Law 98-369 (Tax Reform Act of 1984),
relating to exclusions from gross income of payments from the United
States Forest Service as a result of restricting motorized traffic in
the Boundary Waters Canoe Area, shall apply, with the following
exceptions:
(a) Section 1078(f)(2) of that act shall not be applicable.
(b) This section shall be effective only for payments made in
taxable years beginning on or after January 1, 1985.
17138. Any amount received as a rebate or voucher from a local
water or energy agency or supplier for any expenses the taxpayer paid
or incurred for the purchase or installation of any of the following
devices shall be treated as a refund or price adjustment of amounts
payable to that water or energy agency or supplier:
(a) A water conservation water closet that meets the performance
standards of American National Standards Institute Standard A112.19.2
and uses no more than 1.6 gallons per flush, or for the installation
of a urinal that meets the performance standards of American
National Standards Institute Standard A112.19.2 and uses no more than
one gallon per flush.
(b) A water and energy efficient clothes washer that meets a 1.04
modified energy factor and 9.5 water use efficiency factor as
determined by the State Energy Resources and Conservation Commission.
(c) A plumbing device necessary to serve the recycled water uses
described in Sections 13553 and 13554 of the Water Code.
17138.1. Gross income does not include any amount received as a
rebate, voucher, or other financial incentive issued by the
California Energy Commission, the Public Utility Commission, or a
local publicly owned electric utility, as defined in subdivision (d)
of Section 9604 of the Public Utilities Code, for any expenses paid
or incurred by a taxpayer for the purchase or installation of any of
the following devices:
(a) A thermal system as defined in Section 25600 of the Public
Resources Code.
(b) A solar system as defined in Section 25600 of the Public
Resources Code.
(c) A wind energy system device that produces electricity.
(d) A fuel cell generating system, as described in the California
Energy Commission's Emerging Renewable Resources Account Guidebook,
that produces electricity.
17139.5. For taxpayers who were not allowed to deduct the vehicle
smog impact fee imposed by Section 6262 when paid or incurred, any
interest paid by this state in conjunction with the refund of the
smog impact fee shall be excluded from gross income.
17139.6. Section 139A of the Internal Revenue Code, relating to
federal subsidies for prescription drug plans, shall not apply.
17140. (a) For purposes of this section, the following terms have
the following meanings as provided in the Golden State Scholarshare
Trust Act (Article 19 (commencing with Section 69980) of Chapter 2 of
Part 42 of the Education Code):
(1) "Beneficiary" has the meaning set forth in subdivision (c) of
Section 69980 of the Education Code.
(2) "Benefit" has the meaning set forth in subdivision (d) of
Section 69980 of the Education Code.
(3) "Participant" has the meaning set forth in subdivision (h) of
Section 69980 of the Education Code.
(4) "Participation agreement" has the meaning set forth in
subdivision (i) of Section 69980 of the Education Code.
(5) "Scholarshare trust" has the meaning set forth in subdivision
(f) of Section 69980 of the Education Code.
(b) For taxable years beginning on or after January 1, 1998, and
before January 1, 2002, except as otherwise provided in subdivision
(c), gross income of a beneficiary or a participant does not include
any of the following:
(1) Any distribution or earnings under a Scholarshare trust
participation agreement, as provided in Article 19 (commencing with
Section 69980) of Chapter 2 of Part 42 of the Education Code.
(2) Any contribution to the Scholarshare trust on behalf of a
beneficiary shall not be includable as gross income of that
beneficiary.
(c) For taxable years beginning on or after January 1, 1998, and
before January 1, 2002:
(1) Any distribution under a Scholarshare trust participation
agreement shall be includable in the gross income of the distributee
in the manner as provided under Section 72 of the Internal Revenue
Code, as modified by Section 17085, to the extent not excluded from
gross income under this part. For purposes of applying Section 72 of
the Internal Revenue Code, the following apply:
(A) All Scholarshare trust accounts of which an individual is a
beneficiary shall be treated as one account, except as otherwise
provided.
(B) All distributions during a taxable year shall be treated as
one distribution.
(C) The value of the participation agreement, income on the
participation agreement, and investment in the participation
agreement shall be computed as of the close of the calendar year in
which the taxable year begins.
(2) A contribution by a for-profit or nonprofit entity, or by a
state or local government agency, for the benefit of an owner or
employee of that entity or a beneficiary whom the owner or employee
has the power to designate, including the owner or employee's minor
children, shall be included in the gross income of that owner or
employee in the year the contribution is made.
(3) For purposes of this subdivision, "distribution" includes any
benefit furnished to a beneficiary under a participation agreement,
as provided in Article 19 (commencing with Section 69980) of Chapter
2 of Part 42 of the Education Code.
(4) (A) Paragraph (1) shall not apply to that portion of any
distribution that, within 60 days of distribution, is transferred to
the credit of another beneficiary under the Scholarshare trust who is
a "member of the family," as that term is used in Section 529(e)(2)
of the Internal Revenue Code, as amended by Section 211 of the
Taxpayer Relief Act of 1997 (P.L. 105-34), of the former beneficiary
of that Scholarshare trust.
(B) Any change in the beneficiary of an interest in the
Scholarshare trust shall not be treated as a distribution for
purposes of paragraph (1) if the new beneficiary is a "member of the
family," as that term is used in Section 529(e)(2) of the Internal
Revenue Code, as amended by Section 211 of the Taxpayer Relief Act of
1997 (P.L. 105-34), of the former beneficiary of that Scholarshare
trust.
(d) For taxable years beginning on or after January 1, 2002,
Sections 529(c) and 529(e) of the Internal Revenue Code, relating to
tax treatment of designated beneficiaries and contributors and to
other definitions and special rules, respectively, shall apply,
except as otherwise provided in Part 11 (commencing with Section
23001) and this part.
17140.3. Section 529 of the Internal Revenue Code, relating to
qualified state tuition programs, shall apply, except as otherwise
provided.
(a) Section 529 (a) of the Internal Revenue Code is modified as
follows:
(1) By substituting the phrase "under this part and Part 11
(commencing with Section 23001)" in lieu of the phrase "under this
subtitle."
(2) By substituting "Article 2 (commencing with Section 23731)" in
lieu of "Section 511."
(b) A copy of the report required to be filed with the Secretary
of the Treasury under Section 529(d) of the Internal Revenue Code
shall be filed with the Franchise Tax Board at the same time and in
the same manner as specified in that section.
17140.5. (a) Pursuant to Section 206 of the Servicemembers Civil
Relief Act (50 U.S.C. Appen. Sec. 526), the period of a servicemember'
s military service may not be included in computing any period
limited by law, regulation, or order for the bringing of any action
or proceeding under this part, Part 10.2 (commencing with Section
18401), or Part 11 (commencing with Section 23001), by or against the
servicemember or the servicemember's heirs, executors,
administrators, or assigns.
(b) Section 19521 is modified to provide that, pursuant to Section
207 of the Servicemembers Civil Relief Act (50 U.S.C. Appen. Sec.
527), the maximum rate of interest on any underpayment incurred by a
servicemember, or the servicemember and the servicemember's spouse
jointly, before the servicemember enters military service may not
bear interest at a rate in excess of 6 percent per year during the
period of military service.
(c) Pursuant to Section 511 of the Servicemembers Civil Relief Act
(50 U.S.C. Appen. Sec. 571):
(1) A servicemember not domiciled in this state does not become a
resident of this state by reason of being present in this state
solely in compliance with military orders.
(2) Compensation for military service of a servicemember not
domiciled in this state is not income for services performed or from
sources within this state.
(3) The military compensation of a servicemember not domiciled in
this state may not be used to increase the tax liability imposed on
other income of that servicemember or that servicemember's spouse.
(4) A Native American servicemember whose legal residence or
domicile is a federal Indian reservation shall be treated as living
on the federal Indian reservation and the compensation of that
servicemember for military service shall be deemed to be income
derived wholly from federal Indian reservation sources.
(d) For purposes of this part and Part 10.2 (commencing with
Section 18401), in the case of a servicemember not domiciled in this
state, all of the following shall apply:
(1) Compensation for military service shall not be included in any
of the following:
(A) Gross income of that servicemember or the spouse of that
servicemember.
(B) "Entire taxable income" for purposes of computing the tax
imposed under subdivision (b) or (d) of Section 17041.
(C) "Alternative minimum taxable income" for purposes of computing
tax imposed under subparagraph (B) of paragraph (3) of subdivision
(b) of Section 17062.
(2) Paragraph (2) of subdivision (h) of Section 17024.5 is
modified to provide that references to "adjusted gross income" for
purposes of computing limitations based upon adjusted gross income,
shall mean the amount required to be shown as adjusted gross income
on the federal tax return for the same taxable year reduced by the
amount of the compensation for military service for that taxable year
of a servicemember not domiciled in this state.
(e) (1) "Federal Indian reservation," "servicemember," "military
service," "period of military service," and "compensation for
military service" shall have the same meanings as applicable for
purposes of the Servicemembers Civil Relief Act (50 U.S.C. Appen.
Sec. 501 et seq.).
(2) "Native American" has the same meaning as the term "Indian"
for purposes of applying Section 511(e) of the Servicemembers Civil
Relief Act (50 U.S.C. Appen. Sec. 571(e)) for federal purposes.
(f) The amendments made to this section by the act adding this
subdivision shall apply to any taxable year for which the period for
making assessments or allowing a claim for refund or credit has not
expired as of December 19, 2003.
17142. Sections 111(b) and 111(c) of the Internal Revenue Code,
relating to credits and treatment of credit carryovers, shall be
applicable with respect to credits allowable under this part.
17142.5. (a) For purposes of the following provisions of the
Internal Revenue Code, a qualified hazardous duty area shall be
treated in the same manner as if it were a combat zone (as determined
under Section 112 of the Internal Revenue Code):
(1) Section 2 (a)(3) (relating to a special rule where a deceased
spouse was in missing status).
(2) Section 112 (relating to certain combat zone compensation of
members of the Armed Forces).
(3) Section 692 (relating to income taxes of members of Armed
Forces upon death).
(4) Section 7508 (relating to time for performing certain acts
postponed by reason of service in combat zone).
(b) "Qualified hazardous duty area" means Bosnia and Herzegovina,
Croatia, or Macedonia, if, as of March 20, 1996, any member of the
Armed Forces of the United States is entitled to special pay under
Section 310 of Title 37 of the United States Code (relating to
special pay; duty subject to hostile fire or imminent danger) for
services performed in that country. "Qualified hazardous duty area"
includes any country only during the period that entitlement is in
effect. Solely for purposes of applying Section 7508 of the Internal
Revenue Code, in the case of an individual who is performing services
as part of Operation Joint Endeavor outside the United States while
deployed away from the individual's permanent duty station, the term
"qualified hazardous duty area" includes, during the period for which
that entitlement is in effect, any area in which those services are
performed.
17143. Sections 103 and 141 to 150, inclusive, of the Internal
Revenue Code, relating to interest on governmental obligations, shall
not apply.
17144. (a) Section 108(b)(2)(B) of the Internal Revenue Code,
relating to general business credit, is modified by substituting
"this part" in lieu of "Section 38 (relating to general business
credit)."
(b) Section 108(b)(2)(G) of the Internal Revenue Code, relating to
foreign tax credit carryovers, shall not apply.
(c) Section 108(b)(3)(B) of the Internal Revenue Code, relating to
credit carryover reduction, is modified by substituting "11.1 cents"
in lieu of "33 1/3 cents" in each place in which it appears. In the
case where more than one credit is allowable under this part, the
credits shall be reduced on a pro rata basis.
(d) Section 108(g)(3)(B) of the Internal Revenue Code, relating to
adjusted tax attributes, is modified by substituting "($9)" in lieu
of "($3)."
(e) (1) If a taxpayer makes an election for federal income tax
purposes under Section 108(c) of the Internal Revenue Code, relating
to treatment of discharge of qualified real property business
indebtedness, a separate election shall not be allowed under
paragraph (3) of subdivision (e) of Section 17024.5 and the federal
election shall be binding for purposes of this part.
(2) If a taxpayer has not made an election for federal income tax
purposes under Section 108(c) of the Internal Revenue Code, relating
to treatment of discharge of qualified real property business
indebtedness, then the taxpayer shall not be allowed to make that
election for purposes of this part.
17144.5. (a) Section 108(a)(1)(E) of the Internal Revenue Code, is
modified to provide that the amount excluded from gross income shall
not exceed $500,000 ($250,000 in the case of a married individual
filing a separate return).
(b) Section 108(h)(2) of the Internal Revenue Code, is modified by
substituting the phrase "(within the meaning of section 163(h)(3)
(B), applied by substituting '$800,000 ($400,000' for '$1,000,000
($500,000' in clause (ii) thereof)" for the phrase "(within the
meaning of section 163(h)(3)(B), applied by substituting '$2,000,000
($1,000,000' for '$1,000,000 ($500,000' in clause (ii) thereof)"
contained therein.
(c) This section shall apply to discharges of indebtedness
occurring on or after January 1, 2007, and, notwithstanding any other
law to the contrary, no penalties or interest shall be due with
respect to the discharge of qualified principal residence
indebtedness during the 2007 or 2009 taxable year regardless of
whether or not the taxpayer reports the discharge on his or her
return for the 2007 or 2009 taxable year.
17145. (a) A management company, or series thereof, is qualified to
pay exempt-interest dividends to its shareholders if, at the close
of each quarter of its taxable year, at least 50 percent of the value
of its total assets consists of obligations which, when held by an
individual, the interest therefrom is exempt from taxation by this
state.
(b) For purposes of this section:
(1) "Exempt-interest dividend" means any dividend or part thereof
paid by a management company or series thereof in an amount not
exceeding the interest received by it during its taxable year on
obligations that, when held by an individual, the interest therefrom
is exempt from taxation by this state, and designated by it as an
exempt-interest dividend in a written notice mailed to its
shareholders not later than 60 days after the close of its taxable
year. If the aggregate amount so designated with respect to a taxable
year of the company (including exempt-interest dividends paid after
the close of the taxable year as described in Section 855 of the
Internal Revenue Code) is greater than the excess of:
(A) The amount of interest received by it during its taxable year
on obligations, interest on which, if held by an individual, is
exempt from taxation by this state, over
(B) The amounts that, if it were treated as an individual, would
be disallowed as deductions under Section 17280 of this part or
Section 171(a)(2) of the Internal Revenue Code, the portion of that
distribution that shall constitute an exempt-interest dividend shall
be only that proportion of the amount so designated as the amount of
that excess for that taxable year bears to the amount so designated.
(2) "Management company" means a regulated investment company as
defined by Section 851 of the Internal Revenue Code.
(3) "Series" means a segregated portfolio of assets, the
beneficial interest in which is owned by the holders of a class or
series of stock of the management company that is preferred over all
other classes or series with respect to that portfolio of assets.
(4) "Value" means, with respect to securities (other than those of
majority-owned subsidiaries) for which market quotations are readily
available, the market value of those securities; and with respect to
other securities and assets, fair market value as determined in good
faith by the board of directors or trustees, except that in the case
of securities of majority-owned subsidiaries that are investment
companies, as defined in the Investment Company Act of 1940, that
fair value shall not exceed market value or asset value, whichever is
higher.
(c) An exempt-interest dividend shall be treated by recipients
thereof as an item of interest excludable from income.
17146. The compensation of employees of a foreign country shall be
determined in accordance with Section 893 of the Internal Revenue
Code.
17147.7. (a) Gross income does not include any income which is
received as a reward from a crime hotline that is authorized by any
governmental entity.
(b) For the purposes of this section, "crime hotline" means any
method of direct communication established by a government agency or
a private, nonprofit organization exempt from taxation under Section
23701d for the purpose of permitting individuals to report criminal
activity to that agency or organization, or any other designated
government agency.
(c) This section shall not apply to an employee of an agency or
organization establishing or operating a crime hotline or to an
employee of an organization that has contributed to the reward
described in subdivision (a).
17149. (a) Gross income does not include compensation or the fair
market value of any other benefit, except salary or wages, received
by an employee from an employer for participation in any ridesharing
arrangement in California, including those specified in subdivision
(b).
(b) For purposes of this section, compensation or the fair market
value of any other benefit received for participation in a
ridesharing arrangement in California includes compensation or other
benefit received for:
(1) Commuting in a vanpool.
(2) Commuting in a private commuter bus or buspool.
(3) A transit pass for use by the employee or his or her
dependents, other than transit passes for use by elementary and
secondary school students who are dependents of the employee.
(4) Commuting in a subscription taxipool.
(5) Commuting in a carpool.
(6) Free or subsidized parking.
(7) An employee's bicycling to or from his or her place of
employment.
(8) Commuting by ferry.
(9) The use of an alternative transportation method, other than a
method otherwise specified in this subdivision, that reduces the use
of a motor vehicle by a single occupant to travel to or from that
individual's place of employment.
(10) Travel to or from a telecommuting facility.
(c) For purposes of this section:
(1) "Vanpool" means seven or more persons commuting on a daily
basis to and from work by means of a vehicle with a seating
arrangement designed to carry 7 to 15 adults, including the driver,
that is used to transport those persons who commute to and from work
on a regular basis.
(2) "Transit pass" means any purchase of transit rides that
entitles the holder to any number of transit rides to and from the
workplace, whether at a discount rate or the base fare rate.
(3) "Transit" means transportation service for use by the general
public that utilizes buses, railcars, or ferries with a seating
capacity of 16 or more persons.
(4) "Subscription taxipool" means a type of service in which
employers or groups of employees contract with a public or private
taxi operator to provide daily commuter service for a group of
preassembled subscribers on a prepaid or daily fare basis following a
relatively fixed route and schedule tailored to meet the needs of
the subscribers.
(5) "Ridesharing arrangement" means the transportation of persons
in a motor vehicle where that transportation is incidental to another
purpose of the driver. The term includes ridesharing arrangements
known as carpools, vanpools, and buspools.
(6) "Carpool" means two or more persons commuting on a daily basis
to and from work by means of a vehicle with a seating arrangement
designed to carry less than seven adults, including the driver.
(7) "Buspool" means 16 or more persons commuting on a daily basis
to and from work by means of a vehicle with a seating arrangement
designed to carry more than 15 adult passengers.
(8) "Private commuter bus" means a highway vehicle which meets all
of the following criteria:
(A) Has a seating capacity of at least seven adults, including the
driver.
(B) At least 50 percent of the mileage of which can be reasonably
expected to be used for the purpose of transporting employees to and
from work.
(C) Is acquired by the taxpayer on or after the date of enactment
of this section.
(D) With respect to which the taxpayer makes an election under
this paragraph on his or her return for the taxable year in which the
vehicle is placed in service.
(9) "Free or subsidized parking" means the benefit received from
an employer for parking while participating in a ridesharing
arrangement within California.
(10) "Alternative commute program" means any alternative
transportation method or program the purpose of which is to reduce
the use of a motor vehicle by a single occupant to travel to and from
that individual's place of employment.
17151. (a) Gross income of an employee does not include any
amounts, not exceeding an aggregate amount of five thousand two
hundred fifty dollars ($5,250) per calendar year, that is paid or
incurred by the employer for educational assistance to the employee
pursuant to an educational assistance program.
(b) For purposes of this section, the following definitions shall
apply:
(1) "Educational assistance" means the payment by an employer of
expenses incurred by or on behalf of an employee for the employee's
education, and includes, but is not limited to, payments for books,
supplies, equipment, tuition, and fees, and similar payments.
"Educational assistance" includes the provision by an employer of
courses of instruction for an employee, including the provision of
books, supplies, and equipment. "Educational assistance" does not
include any payment for, or the provision of, any of the following:
(A) Any tools or supplies that may be retained by the employee
after completion of a course of instruction.
(B) Any meals, lodging, or transportation.
(C) Any course or education involving sports, games, or hobbies.
(D) Any course or education taken at the graduate level of a kind
normally taken by an individual pursuing a program leading to a law,
business, medical, or other advanced academic or professional degree.
This subparagraph applies only to any course or education taken at
the graduate level beginning after June 30, 1996, and before January
1, 2000.
(2) "Educational assistance program" means a separate written plan
of an employer for the exclusive benefit of his or her employees to
provide those employees with educational assistance. The program
shall meet the following requirements:
(A) The program benefits employees who qualify under a
classification established by the employer and found by the Franchise
Tax Board not to be discriminatory in favor of employees who are
highly compensated employees (within the meaning of Section 414(q) of
the Internal Revenue Code) or their dependents. For purposes of this
subparagraph, there shall be excluded from consideration employees
who are not included in the program and who are included in a unit of
employees covered by an agreement that the Franchise Tax Board finds
to be a collective bargaining agreement between employee
representatives and one or more employers, if there is evidence that
educational assistance benefits were the subject of good faith
bargaining between the employee representatives and the employer or
employers.
(B) Not more than 5 percent of the amounts paid or incurred by the
employer for educational assistance during the year may be provided
for the class of individuals who are owners (or their spouses or
dependents), each of whom, on any day of the year, owns more than 5
percent of the capital or profits interest in the employer.
(C) The program does not provide eligible employees with a choice
between educational assistance and other remuneration includable in
gross income. For purposes of this section, the business practices of
the employer, as well as the written program, shall be taken into
account.
(D) The program need not be funded.
(E) Reasonable notification of the availability and terms of the
program is provided to eligible employees.
(3) "Employee" includes self-employed individuals within the
meaning of Section 401(c)(1) of the Internal Revenue Code.
(c) For purposes of this section:
(1) Any individual who owns the entire interest in an
unincorporated trade or business shall be treated as his or her own
employee.
(2) A partnership shall be treated as the employer of each partner
who is an employee within the meaning of paragraph (3) of
subdivision (b).
(3) (A) An educational assistance program shall not be considered
to fail to meet any of the requirements of paragraph (2) of
subdivision (b) on the sole basis of either of the following:
(i) Different utilization rates for the different types of
educational assistance made available under the program.
(ii) Successful completion or attainment of a particular course
grade is required for or considered in determining reimbursement
under the program.
(B) This section shall not be construed to affect the deduction or
inclusion in income of amounts that are paid or incurred or received
as reimbursement for educational expenses under Section 117, 162, or
212 of the Internal Revenue Code.
(d) No deduction or credit shall be allowed to the employee with
respect to any amount that the employee excludes from income pursuant
to this section.
(e) Section 127 of the Internal Revenue Code shall not apply.
(f) This section shall apply with respect to expenses relating to
courses beginning after June 30, 1996.
17152. Section 121 of the Internal Revenue Code, relating to
exclusion of gain from sale of principal residence, is modified as
follows:
(a) The two-year period in Section 121(a) of the Internal Revenue
Code shall be reduced by the period of the taxpayer's service, not to
exceed 18 months, in the Peace Corps during the five-year period
ending on the date of the sale or exchange.
(b) If the taxpayer is prohibited from filing a joint return
pursuant to Section 18521, Section 121(b)(2)(A) of the Internal
Revenue Code shall nevertheless be treated as being satisfied if the
taxpayer files a joint return for federal income tax purposes for the
same taxable year. However, in no instance shall the total amount
excludable from gross income under Section 121(a) of the Internal
Revenue Code with respect to any sale or exchange exceed the maximum
amount allowed by Section 121(b) of the Internal Revenue Code.
(c) (1) If a taxpayer has, at any time, made an election for
federal purposes under Section 121(f) of the Internal Revenue Code
not to have Section 121 of the Internal Revenue Code apply to a sale
or exchange, Section 121 of the Internal Revenue Code shall not apply
to that sale or exchange for state purposes, a separate election for
state purposes shall not be allowed under paragraph (3) of
subdivision (e) of Section 17024.5, the federal election shall be
binding for purposes of this part, and that election shall be treated
as an election to include in gross income for purposes of this part
all the gain from the sale or exchange of that property, including
that amount which, but for that election, would have been excluded
from income under Section 121(a) of the Internal Revenue Code for
state purposes.
(2) If a taxpayer fails to make an election for federal purposes
under Section 121(f) of the Internal Revenue Code to not have Section
121 of the Internal Revenue Code apply to a sale or exchange, no
election under Section 121(f) of the Internal Revenue Code shall be
allowed for state purposes, Section 121 of the Internal Revenue Code
shall apply to that sale or exchange for state purposes, and a
separate election for state purposes shall not be allowed under
paragraph (3) of subdivision (e) of Section 17024.5.
(d) (1) If a taxpayer has, at any time, made an election for
federal purposes under Section 312(d)(2) of the Taxpayer Relief Act
of 1997 (Public Law 105-34), relating to sales before date of
enactment, or Section 312(d)(4) of that act, relating to binding
contracts, to not have the amendments made by Section 312 of the
Taxpayer Relief Act of 1997 (Public Law 105-34) apply to a sale or
exchange, the amendments made by the act adding this subdivision
shall not apply to that sale or exchange, Sections 1, 4, and 6 of
Chapter 610 of the Statutes of 1997 shall not apply to that sale or
exchange, a separate election for state purposes shall not be allowed
under paragraph (3) of subdivision (e) of Section 17024.5, and the
federal election shall be binding for purposes of this part.
(2) If a taxpayer fails to make an election for federal purposes
under Section 312(d)(2) of the Taxpayer Relief Act of 1997 (Public
Law 105-34), relating to sales before date of enactment, or Section
312(d)(4) of that act, relating to binding contracts, to not have the
amendments made by Section 312 of the Taxpayer Relief Act of 1997
(Public Law 105-34) apply to a sale or exchange, an election under
Section 312(d)(2) of the Taxpayer Relief Act of 1997 (Public Law
105-34), relating to sales before date of enactment, or Section 312
(d)(4) of that act, relating to binding contracts, shall not be
allowed for state purposes, the amendments made by the act adding
this subdivision shall apply to that sale or exchange, Sections 1, 4,
and 6 of Chapter 610 of the Statutes of 1997 shall apply to that
sale or exchange, and a separate election for state purposes shall
not be allowed under paragraph (3) of subdivision (e) of Section
17024.5.
(e) (1) If a taxpayer has, at any time, made or revoked an
election for federal purposes under Section 121(d)(9) of the Internal
Revenue Code to suspend the running of the five-year period
described in Sections 121(a), 121(c)(1)(B), and 121(d)(7) of the
Internal Revenue Code, that election or revocation of election to
suspend the five-year period under Section 121(d)(9) of the Internal
Revenue Code shall be applicable for state purposes, a separate
election or revocation of election for purposes of Section 121(d)(9)
of the Internal Revenue Code may not be allowed under paragraph (3)
of subdivision (e) of Section 17024.5, and the federal election or
revocation of election shall be binding for purposes of this part.
(2) If a taxpayer fails to make an election for federal purposes
under Section 121(d)(9) of the Internal Revenue Code to suspend the
running of the five-year period described in Sections 121(a), 121(c)
(1)(B), and 121(d)(7) of the Internal Revenue Code, that five-year
period may not be suspended under Section 121(d)(9) of the Internal
Revenue Code for state purposes, and a separate election for state
purposes shall not be allowed under paragraph (3) of subdivision (e)
of Section 17024.5.
(f) Section 121(d)(11) of the Internal Revenue Code, relating to
property acquired from a decedent, shall not apply.
(g) The amendments made by Section 417 of the Tax Relief and
Health Care Act of 2006 (Public Law 109-432) to Section 121(d)(9) of
the Internal Revenue Code, relating to uniformed services, foreign
service, and intelligence community, shall apply to sales or
exchanges that occur on or after January 1, 2010.
(h) The amendments made by subdivision (a) of Section 7 of the
Mortgage Forgiveness Debt Relief Act of 2007 (Public Law 110-142) to
Section 121 of the Internal Revenue Code, relating to exclusion of
gain from sale of principal residence, shall apply to sales or
exchanges that occur on or after January 1, 2010.
17153.5. Gross income does not include any amount received for
empty beverage containers by a consumer from a recycling center or
recycling location as the recycling value, as defined in Chapter 2
(commencing with Section 14502) of Division 12.1 of the Public
Resources Code.
17154. Section 132(j)(8) of the Internal Revenue Code, relating to
application of section to otherwise taxable educational or training
benefits, is modified by substituting "which are not excludable under
Section 17151" in lieu of "which are not excludable under Section
127".
17155. (a) Gross income shall not include any amount, including any
interest or property, that is received as compensation in any
taxable year by a taxpayer pursuant to the German Act Regulating
Unresolved Property Claims, as amended (Gesetz zur Regelung offener
Vermogensfragen).
(b) The basis of any property received pursuant to the German Act
Regulating Unresolved Property Claims shall be the fair market value
of the property at the time of receipt by the taxpayer.
17155. Gross income shall not include either of the following:
(a) (1) Any amount, including any interest or property, that is
received as compensation in any taxable year by a taxpayer pursuant
to the German Act Regulating Unresolved Property Claims, as amended
(Gesetz zur Regelung offener Vermogensfragen).
(2) For purposes of this subdivision, the basis of any property
received pursuant to the German Act Regulating Unresolved Property
Claims shall be the fair market value of the property at the time of
receipt by the taxpayer.
(b) (1) Any amount received by a taxpayer who is a Holocaust
victim or the heir or beneficiary of a Holocaust victim as a result
of a settlement of claims against any entity or individual for any
recovered asset.
(2) For purposes of this subdivision:
(A) "Holocaust victim" means a person who was persecuted by Nazi
Germany or any Axis regime during any period from 1933 to 1945,
inclusive.
(B) "Recovered asset" means any asset of any type, including any
bank deposits, insurance proceeds, or artwork owned by a Holocaust
victim during any period from 1920 to 1945, inclusive, withheld from
that Holocaust victim or his or her heirs or beneficiaries from and
after 1945, and not recovered, returned, or otherwise compensated to
a Holocaust victim or his or her heirs or beneficiaries until 1995,
or thereafter. "Recovered asset" shall also include any interest
earned on any of these assets.
17155.5. Gross income does not include any amount received as
reparation payments paid by the German Foundation known as
Remembrance, Responsibility, and the Future, or any other source of
humanitarian reparations made for purposes of redressing the
injustice done to persons who were required to perform slave or
forced labor during World War II.
17156. (a) Gross income shall not include any amount received as
compensation in any taxable year by a taxpayer pursuant to Assembly
Bill 110 of the 1999-2000 Regular Session.
(b) This section shall apply to taxable years beginning on or
after January 1, 1999.
17156.5. Gross income does not include any amount received as
reparation payments paid by the Canadian government for the purpose
of redressing the injustice done to persons of Japanese ancestry who
were interned in Canada during World War II.
17157. Gross income shall not include any amount received in any
taxable year by a claimant pursuant to Section 4904 of the Penal
Code.
