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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 11168
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I am the executor of the estate of an Austrian born Jew who

Customer Question

I am the executor of the estate of an Austrian born Jew who became a refugee in the late 1930's becoming a US citizen after the war. While alive she received an Austrian social security pension after qualifying under the special provisions negotiated on behalf of Jewish victims. Am I correct in assuming that these payments, and interest earned based on them, are not subject to tax either by the Federal government or the state of California because they quality as restitution payments? Because these payments have been deposited in an Austrian bank account, the threshold for reporting on form 114 has been met. Are deposits of such payments exempt from this filing requirement
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

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They are not exempt from, DISCLOSURE, if the accounts meet the minimum requirements for either FBAR (You can do that here: http://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html ) form 8938.

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You can see the disclosure requirements for both Form 8938, Statement of Specified Foreign Financial Assets and FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR) here: http://www.irs.gov/Businesses/Comparison-of-Form-8938-and-FBAR-Requirements

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But yes, The IRS decided in August 2001 that restitution payments to Holocaust victims and their heirs can be excluded from income when filing federal tax returns. For more information see: http://www.irs.gov/pub/irs-news/ir-01-75.pdf.

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Let me know if you have questions

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Lane

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Customer: replied 1 year ago.
does California conform?
Expert:  Lane replied 1 year ago.

Yes.

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As California is one of the states whose starting point for their state return is federal AGI, this would not be included for CA taxable income.

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Lane

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