In addition to the federal estate tax of 40 percent (which is fourth highest in the OECD), many U.S. states levy their own estate and inheritance taxes. Estate taxes are charged against the estate regardless of who...
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California: Ottoman Turkish Empire Income Exclusion Somehow Persists in Existing
About this time every year, people in California who use tax preparation software remark that they were asked a confusing question about the Ottoman Empire. The reason for this question is to help with the following two sets of instructions from California’s Franchise Tax Board Publication 1001.
California law excludes from gross income, interest income received from settlement payments by individuals persecuted by the regime that was in control of the Ottoman Turkish Empire from 1915 until 1923, or the individual’s heirs or estate. Enter the interest on Schedule CA (540 or 540NR), line 8, column B.
California law provides an income exclusion for settlement payments received by an eligible individual, defined as a person persecuted by the Regime that was in control of the Ottoman Turkish Empire from 1915 until 1923, or the individual’s heirs or estate. Enter on Schedule CA (540 or 540NR), line 21f, column B, the settlement payments amount reported in federal income that qualifies for the California exclusion.
The persecution described was the forced relocation and genocide of Armenians, Christians, and other ethnic and religious minorities in the Ottoman Empire that began under the directive of Interior Minister Talaat Pasha in 1915. It is without a doubt one of the ugliest and cruelest moments in the history of mankind.
While there are no official reparations for the event, there have been some lawsuits pertaining to insurance policies issued during the time period. California tax law excludes income received from settlements pertaining to these events.
It is understandable to want to mitigate the cruelty of racial or religious persecution. There are certainly appropriate and fitting places to do this. Schedule CA 540, line 21f(B) is probably not one of those places. Not every human problem – including and especially those of serious moral significance – can be assuaged by an above-the-line tax deduction.
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