Discussion:Income not taxed by California

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Discussion Forum Index --> Tax Questions --> Income not taxed by California

ROKEL (talk|edits) said:

10 March 2006
Does anyone have any information as to whether retirement received from Burl North SF Retirement Plan is taxable to California. I have a client who had information from someone else that said this is not taxable to California because it is considered as a supplemental annuity from Santa Fe railroad. They suggested reviewing Guide to California Taxes Code Section 205. I could not find anything. I would appreciate anyones feedback

PGattoCPA (talk|edits) said:

11 March 2006
From what I can see doing some quick research on Checkpoint, supplemental annuity income used to be not taxable in CA. I have pasted a couple of FTB rulings. The first shows the old ruling (i.e., not taxable) and the second withdraws the first ruling in order to incorporate federal law (i.e., now taxable). Sorry, I think your client is out of luck.

California FTB Legal Ruling No. 338

Date Issued: 07/07/1969

Tax Type: Personal Income Tax

TAXABILITY OF SUPPLEMENTAL RAILROAD RETIREMENT ANNUITIES Payments received from supplemental railroad retirement annuities are not subject to California Personal Income Tax.

Section 12 of the Railroad Retirement Act of 1937 (45 U.S.C. Section 228 1) provides that annuity or pension payments received under the Act shall not be subject to any tax by the United States or any state, territory, or the District of Columbia.

A modification of this general exemption from taxation was enacted in 1966 by the passage of P. L. 89-699, approved October 30, 1966. This legislation provided for the payment of supplemental annuities and declared these supplemental payments would be subject to federal income tax. (45 U.S.C. Section 228c(j)(4))

However, since only federal taxation of the supplemental annuity payments is authorized by the law, the states are still precluded from taxing such payments by the general rule set forth in Section 12 of the Act.

Accordingly, under Section 17137 of the California Revenue and Taxation Code, supplemental railroad retirement annuity payments are not subject to taxation by California.


STATE OF CALIFORNIA FRANCHISE TAX BOARD - Legal Branch PO Box 1720 Rancho Cordova CA 95741-1720 (916) 845-3309 Fax (916) 845-3868




May 12, 1998


A number of the Legal Rulings that this Department has issued are no longer applicable due to subsequent court decisions and legislative changes. This notice is to advise that each of the Legal Rulings on the attached list is hereby withdrawn.

Review of Legal Rulings is continuing and it is anticipated that additional rulings will be withdrawn. In this event, a future notice or notices will be issued.

Drafting Information

The principal author of this ruling is W. Daniel Converse of the Franchise Tax Board Legal Branch. For further information regarding this ruling, contact Mr. Converse at the Franchise Tax Board Legal Branch, P.O. Box 1720, Rancho Cordova, CA 94751-1720.

Part of the "Attached List" noted above:

Ruling 338

Issued 07/07/69

CCH 204-220

Subject Matter Taxability of Supplemental Railroad Retirement Annuities


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