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 federalbegin delete extensionend deletebegin insert extension, discharge indebtedness for related penalties and interest,end insert and make legislative findings
and declarations regarding the public purpose served by the bill.
This bill would declare that it is to take effect immediately as an urgency statute.
Vote: 2⁄3. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 17144.5 of the Revenue and Taxation
2Code is amended to read:
(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(e) The changes made to this section by the act adding this
25subdivision shall apply to discharges of indebtedness that occur
26on or after
January 1, 2013, and before January 1, 2014, and,
27notwithstanding any other law, no penalties or interest shall be
28due with respect to the discharge of qualified principal residence
29indebtedness during the 2013 taxable year, regardless of whether
P3 1the taxpayer reports the discharge on his or her income tax return
2for the 2013 taxable year.
The amendments made by this act that conform to the
4amendments made by Section 202 of the American Taxpayer Relief
5Act of 2012 (Public Law 112-240) to Section 108 of the Internal
6Revenue Code, apply to qualified principal residence indebtedness
7that is discharged on and after January 1, 2013, and before January
81, 2014. The Legislature finds and declares that the amendments
9made by this act and the retroactive application contained in the
10preceding sentence are necessary for the public purpose of
11conforming state law to the amendments to the Internal Revenue
12Code as made by the American Taxpayer Relief Act of 2012
13(Public Law 112-240), thereby preventing undue hardship to
14taxpayers whose qualified
principal residence indebtedness was
15discharged on and after January 1, 2013, and before January 1,
162014, and do not constitute a gift of public funds within the
17meaning of Section 6 of Article XVI of the California Constitution.
This act is an urgency statute necessary for the
19immediate preservation of the public peace, health, or safety within
20the meaning of Article IV of the Constitution and shall go into
21immediate effect. The facts constituting the necessity are:
22In order to provide tax relief to distressed homeowners at the
23earliest possible time, it is necessary that this act take effect
24immediately.
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