BILL NUMBER: AB 42	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 8, 2013
	AMENDED IN ASSEMBLY  MARCH 4, 2013

INTRODUCED BY   Assembly Member Perea
   (Coauthor: Assembly Member Gray)

                        DECEMBER 7, 2012

   An act to amend Section 17144.5 of the Revenue and Taxation Code,
relating to taxation, to take effect immediately, tax levy.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 42, as amended, Perea. Taxation: cancellation of indebtedness:
mortgage debt forgiveness.
   The Personal Income Tax Law conforms to specified provisions of
federal law 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. The federal American Taxpayer Relief
Act of 2012 extended the operation of those provisions to debt that
is discharged before January 1, 2014.
   This bill would conform to the federal extension.
   This bill would take effect immediately as a tax levy.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


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

  SECTION 1.  Section 17144.5 of the Revenue and Taxation Code is
amended to read:
   17144.5.  (a) Section 108(a)(1)(E) of the Internal Revenue Code,
is modified to provide that the amount excluded from gross income
shall not exceed $500,000 ($250,000 in the case of a married
individual filing a separate return).
   (b) Section 108(h)(2) of the Internal Revenue Code, is modified by
substituting the phrase "(within the meaning of section 163(h)(3)
(B), applied by substituting '$800,000 ($400,000' for '$1,000,000
($500,000' in clause (ii) thereof)" for the phrase "(within the
meaning of section 163(h)(3)(B), applied by substituting '$2,000,000
($1,000,000' for '$1,000,000 ($500,000' in clause (ii) thereof)"
contained therein.
   (c) The amendments made by Section 202 of the American Taxpayer
Relief Act of 2012  (Public Law 112-240)  to Section 108 of
the Internal Revenue Code shall apply.
   (d) This section shall apply to discharges of indebtedness
occurring on or after January 1, 2007, and, notwithstanding any other
law to the contrary, no penalties or interest shall be due with
respect to the discharge of qualified principal residence
indebtedness during the 2007 or 2009 taxable year regardless of
whether or not the taxpayer reports the discharge on his or her
return for the 2007 or 2009 taxable year. 
   (e) The amendments made to this section by the act adding this
subdivision shall apply to discharges occurring on or after January
1, 2013. 
  SEC. 2.  This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.