Amended in Senate May 20, 2014

Amended in Senate April 7, 2014

Amended in Senate September 6, 2013

California Legislature—2013–14 Regular Session

Assembly BillNo. 1393


Introduced by Assembly Member Perea

(Principal coauthors: Senators Cannella and Evans)

(Coauthors: Assembly Members Cooley, Fox, Muratsuchi, and Quirk-Silva)

March 4, 2013


An act to amend Section 17144.5 of the Revenue and Taxation Code, relating to taxation,begin delete making an appropriation therefor,end delete and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

AB 1393, as amended, Perea. Personal income taxes: income exclusion: mortgage debt forgiveness.

The Personal Income Tax Law provides for modified conformity to specified provisions of federal income tax 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 qualified principal residence indebtedness that is discharged before January 1, 2014.

This bill would conform to the federal extension and make legislative findings and declarations regarding the public purpose served by the bill.begin delete The bill would also make a continuous appropriation from the General Fund to the Franchise Tax Board in those amounts necessary to make payments to taxpayers who have included in income and paid tax on qualified principal residence indebtedness that was discharged on and after January 1, 2013, and before January 1, 2014.end delete

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: 23. Appropriation: begin deleteyes end deletebegin insertnoend insert. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 17144.5 of the Revenue and Taxation
2Code
is amended to read:

3

17144.5.  

(a) Section 108(a)(1)(E) of the Internal Revenue
4Code, is modified to provide that the amount excluded from gross
5income shall not exceed $500,000 ($250,000 in the case of a
6married individual filing a separate return).

7(b) Section 108(h)(2) of the Internal Revenue Code, is modified
8by substituting the phrase “(within the meaning of section
9163(h)(3)(B), applied by substituting ‘$800,000 ($400,000’ for
10‘$1,000,000 ($500,000’ in clause (ii) thereof)” for the phrase
11“(within the meaning of section 163(h)(3)(B), applied by
12substituting ‘$2,000,000 ($1,000,000’ for ‘$1,000,000 ($500,000’
13in clause (ii) thereof)” contained therein.

14(c) This section shall apply to discharges of indebtedness
15occurring on or after January 1, 2007, and, notwithstanding any
16other law to the contrary, no penalties or interest shall be due with
17respect to the discharge of qualified principal residence
18indebtedness during the 2007 or 2009 taxable year regardless of
19whether or not the taxpayer reports the discharge on his or her
20return for the 2007 or 2009 taxable year.

21(d) The amendments made by Section 202 of the American
22Taxpayer Relief Act of 2012 (Public Law 112-240) to Section 108
23of the Internal Revenue Code shall apply.

24

SEC. 2.  

The amendments made by this act that conform to the
25amendments made by Section 202 of the American Taxpayer Relief
26Act of 2012 (Public Law 112-240) to Section 108 of the Internal
27Revenue Code, apply to qualified principal residence indebtedness
28that is discharged on and after January 1, 2013, and before January
291, 2014. The Legislature finds and declares that the amendments
P3    1made by this act and the retroactive application contained in the
2preceding sentence are necessary for the public purpose of
3conforming state law to the amendments to the Internal Revenue
4Code as made by the American Taxpayer Relief Act of 2012
5(Public Law 112-240), thereby preventing undue hardship to
6taxpayers whose qualified principal residence indebtedness was
7discharged on and after January 1, 2013, and before January 1,
82014, and do not constitute a gift of public funds within the
9meaning of Section 6 of Article XVI of the California Constitution.

begin delete
10

SEC. 3.  

Notwithstanding Section 13340 of the Government
11Code, and without regard to fiscal year, there is hereby
12continuously appropriated from the General Fund to the Franchise
13Tax Board those amounts necessary to make the payments required
14by this act to taxpayers who have included amounts in gross income
15by reason of the discharge of principal residence indebtedness that
16was discharged on and after January 1, 2013, and before January
171, 2014.

end delete
18

begin deleteSEC. 4.end delete
19begin insertSEC. 3.end insert  

This act is an urgency statute necessary for the
20immediate preservation of the public peace, health, or safety within
21the meaning of Article IV of the Constitution and shall go into
22immediate effect. The facts constituting the necessity are:

23In order to provide tax relief to distressed homeowners at the
24earliest possible time, it is necessary that this act take effect
25immediately.



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