17138.7.
(a) For taxable years beginning on or after January 1, 2024, and before January 1, 2029, gross income does not include any qualified amount received by a qualified taxpayer.(b) For purposes of this section:
(1) “Qualified amount” means any amount received in settlement by a qualified taxpayer to replace property damaged or destroyed by wildfire if the property damaged or destroyed is located in an area of California damaged by the wildfire.
(2) “Qualified taxpayer” means any of the following:
(A) Any taxpayer that owns real property located in an area damaged by a wildfire who paid or incurred expenses, and received amounts from a settlement, arising out of or pursuant to the wildfire.
(B) Any taxpayer that resides within an area damaged by a wildfire who paid or incurred expenses, and received amounts from a settlement, arising out of or pursuant to the wildfire.
(C) Any taxpayer that has a place of business within an area damaged by a wildfire who paid or incurred expenses, and received amounts from a settlement, arising out of or pursuant to the wildfire.
(3) “Settlement entity” means the entity, approved by a class action settlement administrator, making the settlement payment to a qualified taxpayer.
(c) The settlement entity shall provide, upon request by the Franchise Tax Board or qualified taxpayer, documentation of the settlement payments in the form and manner requested by the Franchise Tax Board or the qualified taxpayer who may provide the documentation to the Franchise Tax Board upon request.
(d) (1) For the purpose of complying with Section 41, as it relates to the exclusion provided by this section and Section 24309.2, the Legislature finds and declares that the purpose of the exclusion is to provide essential relief to individuals who have suffered injury, loss, inconvenience, and expenses resulting from devastating wildfires.
(2) (A) By November 1, 2027, and annually thereafter, the Franchise Tax Board shall deliver to the Legislature a written report, in accordance with Section 9795 of the Government Code, that includes both of the following:
(i) The number of qualified taxpayers that excluded qualified amounts from gross income as a result of the exclusion allowed by this section and Section 24309.2.
(ii) The aggregate amount of those settlement payments arising out of the wildfires.
(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.
(e) This section shall remain in effect only until December 1, 2029, and as of that date is repealed.