While the rest of America debated if and how reparations should be given for the injustices of slavery and segregation, the state of California took legislative action to atone for the mistreatment of one Black couple whose land the state wrongfully took through eminent domain in 1924. In an unprecedented move, California’s legislators returned a large piece of land, known as “Bruce’s Beach,” located in the prestigious Manhattan Beach, California, to the descendants of its rightful owners. Because there is no statute in the Internal Revenue Code (IRC) specifically addressing land reparations, the tax implications for Bruce’s Beach remain unclear.
II. The Story of Bruce’s Beach
In 1912, Willa and Charles Bruce purchased a California beachfront property and converted the land into “the first west coast resort for Black people.” Despite forceful attempts by local Klan members to run the Bruces off Bruce’s Beach, the resort remained popular and successful with other Black residents and visitors. However, in 1924, “the Manhattan Beach Board of Trustees voted to condemn Bruce’s Beach and the surrounding land through the power of eminent domain under the ostensible purpose of building a park.” The Board of Trustees tore down the resort and “enacted ordinances precluding the opening of any new beach resort in order to prevent the Bruces from relocating their business elsewhere in the city.” Bruce’s Beach sat dormant until 1948, when the City Council transferred it to the state. The state eventually transferred Bruce’s Beach to the county in 1995, but the transfer included strict limitations on further transfers and land use.
When Los Angeles County Supervisor Janice Han discovered Bruce’s Beach’s history, she set in motion a national crusade to return the land to the descendants of Willa and Charles Bruce. The grassroots movement “Justice for Bruce’s Beach” was created to help restore Bruce’s Beach to its rightful owners. As a result, California’s legislature unanimously passed Senate Bill 796 (the “Bill”), signed into law by California’s Governor Gavin Newsom, which lays out the process of returning the land to the Bruce family. Although the Bill includes a section on mitigating state tax liabilities for the Bruce’s descendants, it is silent on how to address the possible federal tax implications of the transfer of such valuable property.
III. Possible Federal Tax Implications for Bruce’s Beach
The United States Constitution states that “Congress shall have the power to lay and collect taxes on incomes, from whatever source derived . . . .” The IRC defines “gross income” as “all income from whatever source derived[.]” The Supreme Court “has given a liberal construction to this broad phraseology in recognition of the intention of Congress to tax all gains except those specifically exempted.” All gains include “undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion.” Because there is no specific exemption for land reparations listed in the IRC, “receiving reparations proceeds would likely be considered accession to wealth, just from a very peculiar but taxable source.” Therefore, all land reparations, including Bruce’s Beach, would likely be considered gross income “unless Congress specifically excludes it from gross income, the judiciary finds that the amount is not income at all, or the IRS uses its prosecutorial discretion not to tax it.”
Statutorily, Congress could amend the IRC to exclude land reparations from gross income or to state that land reparations are not income. Congress could also be persuaded to change the law through the lobbying efforts of reparations advocates. This avenue is likely favorable if the results surrounding Bruce’s Beach “forge a path for those seeking ways to reckon with our country’s history of violently dispossessing Indigenous people and blocking Black people, Japanese Americans, Latinos[,] and many others from building generational wealth.”
If the judiciary holds land reparations to be income, based on previous Supreme Court decisions, it is still possible that courts will employ “jurisprudential doctrines relating to fairness.” For example, the doctrine of “relation back” is available to the courts should they decide to exclude reparations proceeds from gross income. Applying this doctrine to Bruce’s Beach, a court could relate back to when Willa and Charles Bruce lost their land through the racially motivated use of eminent domain.
Finally, “the IRS, like other government agencies, is entitled to a considerable amount of deference to its prosecutorial discretion.” Specifically, “the IRS has ultimate discretion on which individuals it pursues for tax, and how vigorously.” Therefore, it is possible that the IRS may simply choose not to pursue the taxation of Bruce’s descendants even if the transferred property of Bruce’s Beach is considered gross income. Another option available to the IRS, though rarely used, could be to not tax land reparations at all. In fact, the IRS previously issued a similar ruling, where it chose to exclude Holocaust victims’ reparations from taxation. Whether the IRS will decide to expand its current ruling or create a rule specifically for slavery and segregation reparations remains to be seen.
With the rise of reparations advocacy groups and the passing of the Bill, the story of Bruce’s Beach serves as a model for how states may hold themselves accountable for cheating Black families out of generations of wealth through discriminatory land use practices. Although it is unclear how the federal government will deal with the possible tax implications of future reparations, in the interest of fairness, simply assessing land reparations as gross income should not be an option.
*Rebecca Odelius is a second-year day student at the University of Baltimore School of Law, where she is a Staff Editor for Law Review and a Royal Graham Shannonhouse III Honor Society Scholar. Rebecca works as a Law Clerk for Silverman Thompson Slutkin & White’s Baltimore office and is a research assistant for Professor Vallario in the field of Trusts and Estates. During summer 2021, she interned for the Maryland SAFE Center for Human Trafficking Victims. Prior to law school, Rebecca taught middle school English and authored several young adult novels.
 See generally Andre Smith & Carlton Waterhouse, No Reparation Without Taxation: Applying the Internal Revenue Code to the Concept of Reparations for Slavery and Segregation, 7 Pitt. Tax Rev. 159, 159–61 (2010).
 “Eminent Domain” is defined as “[t]he inherent power of a governmental entity to take privately owned property, esp. land, and convert it to public use, subject to reasonable compensation for the taking.” Eminent Domain, Black’s Law Dictionary (11th ed. 2019).
 See S.B. 796, 2021 Reg. Sess. (Cal. 2021).
 See id.
 See id.
 See generally I.R.C.
 Bruce’s Beach to be Returned to Black Family 100 Years After City ‘Used the Law to Steal It,’ The Guardian (Oct. 1, 2021, 1:40 PM), https://www.theguardian.com/us-news/2021/oct/01/bruces-beach-returned-100-years-california.
 See Rosanna Xia, Bruce’s Beach Can Return to Descendants of Black Family in Landmark Move Signed by Newsom, L.A. Times (Sept. 30, 2021, 2:49 PM), https://www.latimes.com/california/story/2021-09-30/newsom-signs-law-to-return-bruces-beach-black-family (“The Ku Klux Klan purportedly set fire to a mattress under the main deck and torched a Black-owned home nearby.”).
 See id.
 S.B. 796.
 See Xia, supra note 8.
 See S.B. 796.
 See Xia, supra note 8.
 See id; see also S.B. 796.
 See S.B. 796.
 U.S. Const. amend. XVI.
 I.R.C. § 61(a).
 Comm’r v. Glenshaw Glass Co., 348 U.S. 426, 430 (1955).
 Id. at 431; see also I.R.C. § 1001(b) (“The amount realized from the sale or other disposition of property shall be the sum of any money received plus the fair market value of the property (other than money) received.”).
 See I.R.C. Part III—Items Specifically Excluded from Gross Income.
 Smith & Waterhouse, supra note 1, at 175.
 Id. at 161.
 See id. at 171–72.
 See id. at 173.
 Xia, supra note 8.
 See supra text and accompanying notes 19–20.
 Smith & Waterhouse, supra note 1, at 180.
 “Relation back” is when “an act done at a later time is, under certain circumstances, treated as though it occurred at an earlier time.” Relation Back, Black’s Law Dictionary (11th ed. 2019).
Smith & Waterhouse, supra note 1, at 180; U.S. Legal, https://definitions.uslegal.com/d/doctrine-of-relation-back/ (last visited Jan. 21, 2022) (“Doctrine of Relation Back is a principle that something done today will be treated as if it were done earlier.”).
 See Smith & Waterhouse, supra note 1, at 180 (“Courts may, in the name of equity, disavow the formal date of a transfer in favor of the date upon which a substantive act inspired the transaction.”).
 Id. at 183.
 See id.
 See id. at 184 (discussing Rev. Rul. 56-518 and the possible correlation between reparations to Holocaust survivors and those receiving reparations for “slavery and segregation”).
 See Xia, supra note 8.