BILL NUMBER: AB 42	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Perea

                        DECEMBER 7, 2012

   An act relating to taxation.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 42, as introduced, Perea. Taxation: cancellation of
indebtedness: mortgage debt forgiveness.
   The Personal Income Tax Law conforms to specified provisions of
the federal Mortgage Forgiveness Debt Relief Act of 2007, as amended
by the federal Emergency Economic Stabilization Act of 2008, relating
to the exclusion of the discharge of qualified principal residence
indebtedness, as defined, from an individual's income if that debt is
discharged after January 1, 2007, and before January 1, 2013, as
provided.
   This bill would make findings and declarations regarding mortgage
debt forgiveness and would state the intent of the Legislature to
enact legislation that would conform to federal law with regard to
any extension of the exclusion described above.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) A homeowner can lose his or her job or become seriously ill
and then be unable to pay the monthly mortgage. In the resulting
short sale or foreclosure, the homeowner not only loses his or her
home, but may also be taxed on relief of indebtedness income that the
homeowner did not receive.
   (b) If the homeowner refinances his or her mortgage, as many
homeowners do, the nature of the debt is changed and the homeowner
may be personally liable for the payment of that debt.
   (c) Absent an extension of the debt forgiveness protections beyond
this year, homeowners will again be subject to taxation on income
they never actually received.
  SEC. 2.  It is the intent of the Legislature to enact legislation
that would extend the operation of Section 17144.5 of the Revenue and
Taxation Code, relating to the exclusion of the discharge of
qualified principal residence indebtedness from an individual's
income, to conform to any federal legislation that extends the
operation of this exclusion in federal income tax law.