SB 30, as amended, Calderon. 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, relating to the exclusion of the discharge of qualified principal residence indebtedness, as defined, from a taxpayer’s income if that debt is discharged after January 1, 2007, and before January 1, 2010, as provided. The federal Emergency Economic Stabilization Act of 2008 extended the operation of those provisions to debt that is discharged before January 1, 2013.
This bill would extend the operation of the exclusion of the discharge of qualified principal residence indebtedness to debt that is discharged on or after January 1, 2013, and before January 1, 2014. The bill would become operative only if SB 391 is enacted and takes effect.
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 modifiedbegin delete as follows:end deletebegin insert to provide that the amount excluded
5from gross income shall not exceed $500,000 ($250,000 in the
6case of a married individual filing a separate return).end insert
7(1) To provide that the amount excluded from gross income
8shall not exceed $500,000 ($250,000 in the case of a married
9individual filing a separate return).
10(2) By substituting the phrase “January 1, 2014” for the phrase
11“January 1, 2013” contained therein.
12(b) Section 108(h)(2) of the Internal Revenue Code, is modified
13by substituting the phrase “(within the meaning of section
14163(h)(3)(B), applied by substituting ‘$800,000 ($400,000’ for
15‘$1,000,000 ($500,000’ in clause (ii) thereof)” for the phrase
16“(within the meaning of section 163(h)(3)(B), applied by
17substituting ‘$2,000,000 ($1,000,000’ for ‘$1,000,000 ($500,000’
18in clause (ii) thereof)” contained therein.
19(c) The amendments made by Section 202 of the American
20Taxpayer Relief Act of 2012 (Public Law 112-240) to Section 108
21of the Internal Revenue Code shall apply.
22(c)
end delete
23begin insert(d)end insert This section shall apply to discharges of indebtedness
24occurring on or after January 1, 2007, and, notwithstanding any
25other law to the contrary, no penalties or interest shall be due with
26respect to the discharge of qualified principal residence
27indebtedness during the 2007 or 2009 taxable year regardless of
28whether or not the taxpayer reports the discharge on his or her
29return for the 2007 or 2009 taxable year.
P3 1(d)
end delete
2begin insert(e)end insert The amendments made to
this section by the act adding this
3subdivision shall apply to discharges occurring on or after January
41, 2013.
This act shall become operative only if Senate Bill
6391 of the 2013-14 Regular Session is enacted and takes effect.
This act is an urgency statute necessary for the
8immediate preservation of the public peace, health, or safety within
9the meaning of Article IV of the Constitution and shall go into
10immediate effect. The facts constituting the necessity are:
11In order to provide tax relief to distressed homeowners at the
12earliest possible time, it is necessary for this act to take effect
13immediately.
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