BILL NUMBER: AB 99	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  FEBRUARY 18, 2015

INTRODUCED BY   Assembly Member Perea

                        JANUARY 8, 2015

   An act to amend Section 17144.5 of the Revenue and Taxation Code,
relating to taxation, and declaring the urgency thereof, to take
effect immediately.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 99, 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, 2014, as
provided.  The federal Tax Increase Prevention Act of 2014
extended the operation of those provisions to debt that is discharged
before January 1, 2015.  
   This bill would extend the operation of those provisions to
qualified principal residence indebtedness that is discharged before
January 1, 2015, thereby no longer conforming to federal income tax
law. The bill would also discharge indebtedness for related penalties
and interest and would make legislative findings and declarations
regarding the public purpose served by the bill.  
    This bill would conform to the federal extension, discharge
indebtedness for related penalties and interest, 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 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  as follows: 
    (1)     By providing
  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). 
   (2) By substituting "January 1, 2014" for "January 1, 2015."

   (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) 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.
   (d)  (1)    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. 
   (e) 
    (2)  The changes made to this section by Chapter 152 of
the Statutes of 2014 shall apply to discharges of indebtedness that
occur on or after January 1, 2013, and before January 1, 2014, and,
notwithstanding any other law, no penalties or interest shall be due
with respect to the discharge of qualified principal residence
indebtedness during the 2013 taxable year, regardless of whether the
taxpayer reports the discharge on his or her income tax return for
the 2013 taxable year. 
   (e) (1) The amendments made by Section 102 of the Tax Increase
Prevention Act of 2014 (Public Law 113-295) to Section 108 of the
Internal Revenue Code shall apply.  
   (f) 
    (2)  The changes made to this section by the act adding
this  subdivision   paragraph  shall apply
to discharges of indebtedness that occur on or after January 1, 2014,
and before January 1, 2015, and, notwithstanding any other law, no
penalties or interest shall be due with respect to the discharge of
qualified principal residence indebtedness during the 2014 taxable
year, regardless of whether the taxpayer reports the discharge on his
or her income tax return for the 2014 taxable year.
  SEC. 2.  The amendments made by this act that  extend the
operation of   conform to  the amendments made by
 Section 202 of the American Taxpayer Relief Act of 2012
(Public Law 112-240)   Section 102 of the Tax Increase
Prevention Act of 2014 (Public Law 113-295)  to Section 108 of
the Internal Revenue Code, apply to qualified principal residence
indebtedness that is discharged on and after January 1, 2014, and
before January 1, 2015. The Legislature finds and declares that the
amendments made by this act and the retroactive application contained
in the preceding sentence are necessary for the public purpose of
 extending for an additional year,   conforming
state law to  the amendments to the Internal Revenue Code as
made by the  American Taxpayer Relief Act of 2012 (Public Law
112-240),   Tax Increase Prevention Act of 2014 (Public
Law 113-295)  thereby preventing undue hardship to taxpayers
whose qualified principal residence indebtedness was discharged on
and after January 1, 2014, and before January 1, 2015, and do not
constitute a gift of public funds within the meaning of Section 6 of
Article XVI of the California Constitution.
  SEC. 3.  This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
   In order to provide tax relief to distressed homeowners at the
earliest possible time, it is necessary that this act take effect
immediately.