617 Awards received in reparation for the seizure, theft, requisition or involuntary conversion of the income or property of victims of Nazi persecution

Title 61--REVENUE

DEPARTMENT OF REVENUE

[61 PA. CODE CHS. 94 AND 125]

Awards Received in Reparation for the Seizure, Theft, Requisition or Involuntary Conversion of the Income or Property of Victims of Nazi Persecution

[29 Pa.B. 2037]

   The Department of Revenue (Department) has adopted statements of policy under the authority contained ins § 3.2 (relating to statements of policy). These statement of policy add §§ 94.2 and 125.41--125.43 and shall take effect upon publication in the Pennsylvania Bulletin.

   These statements of policy set forth the Department's policy regarding the taxation of Holocaust settlements. For Inheritance Tax purposes, at the time of conversion, each decedent's assets became valueless. Until reparation, there was no hope of finding, identifying or receiving, those assets. Therefore, when the estates were settled, § 94.2 provides that those assets had no value to be taxed. These statements of policy further provide in §§ 125.41--125.43, that for Personal Income Tax purposes, the money being collected by the survivors is excluded if it was accrued prior to 1971, when the State Personal Income Tax began.

   Specific questions relating to information provided in these Statements of Policy may be directed to the Department of Revenue, Office of Chief Counsel, Department 281061, Harrisburg, PA 17128-1061.

ROBERT A. JUDGE, Sr.,   
Secretary

   (Editor's Note:  The regulations of the Department, 61 Pa. Code Chapters 94 and 125, are amended by adding statements of policy in §§ 94.2 and 125.41--125.43 to read as set forth in Annex A.)

   Fiscal Note:  15-409. No fiscal impact; (8) recommends adoption.

Annex A

TITLE 61.  REVENUE

PART I.  DEPARTMENT OF REVENUE

Subpart B.  GENERAL FUND REVENUES

ARTICLE IV.  COUNTY COLLECTIONS

CHAPTER 94.  INHERITANCE TAX PRONOUNCEMENTS--STATEMENTS OF POLICY

§ 94.2.  Awards received in reparation for the seizure, theft, requisition or involuntary conversion of the income of victims of Nazi persecution.

   For decedents dying on or before the date upon which the awards or settlements received by a decedent's estate in reparation for the seizure, theft, requisition or involuntary conversion of the property or income of victims of Nazi persecution are liquidated pursuant to any legally binding settlement or notice, or both, thereof, the assets are determined by the Department to have a value of zero at the decedent transferor's death.

CHAPTER 125.  PERSONAL INCOME TAX PRONOUNCEMENTS--STATEMENTS OF POLICY

§ 125.41.  Awards received in reparation for the seizure, theft, requisition or involuntary conversion of the income of victims of Nazi persecution.

   Awards or settlements received in reparation for the seizure, theft, requisition or involuntary conversion of the income of victims of Nazi persecution are taxable only as to the following:

   (1)  Amounts paid as a substitute for taxable income accruing after one of the following:

   (i)  May 30, 1971.

   (ii)  If the right to receive the income was acquired from a decedent by bequest, devise or inheritance or by the decedent's estate, the later of May 30, 1971, or the decedent's date of death.

   (2)  Amounts awarded as legal interest for periods after one of the following:

   (i)  May 30, 1971.

   (ii)  If the right to receive the income was acquired from a decedent by bequest, devise or inheritance or by the decedent's estate, the later of May 30, 1971, or the decedent's date of death.

§ 125.42.  Awards received in reparation for the seizure, theft, requisition or involuntary conversion of the property of victims of Nazi persecution.

   Awards or settlements received in reparation for the seizure, theft, requisition or involuntary conversion of the property of victims of Nazi persecution constitute proceeds from the disposition of property. Gain or loss shall be recognized on the same basis as gain or loss from the sale or exchange of property acquired before June 1, 1971, (see § 103.13(f) (relating to net gains or income from disposition of property)), or property of a decedent acquired by bequest, devise or inheritance or by the decedent's estate.

§ 125.43.  Recoveries of converted property.

   No gain is realized on the recovery of involuntarily converted property unless the taxpayer has previously claimed a business or nonbusiness loss on its conversion.

[Pa.B. Doc. No. 99-617. Filed for public inspection April 16, 1999, 9:00 a.m.]