Investopedia explains 'Holocaust Restitution Payments'
Holocaust restitution payments are not taxable as income at the federal level if the payment is received by someone who was persecuted by the Nazis on the basis of race, religion, physical or mental disability, or sexual orientation, or if payment is received by the heirs or estate of such a person. In contrast, Holocaust restitution payments that are received as compensation for stolen assets are considered taxable income.
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