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 conform tobegin delete theend deletebegin insert thatend insert 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 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
20
return for the 2007 or 2009 taxable year.
21(d) (1) 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(2) The changes made to this section by Chapter 152 of the
25Statutes of 2014 shall apply to discharges of indebtedness that
26occur on 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
30the taxpayer reports the discharge on his or her income tax return
31for the 2013 taxable year.
32(e) (1) The amendments made by Section 102 of the Tax
33Increase Prevention Act of 2014 (Public Law 113-295) to Section
34108 of the Internal Revenue Code shall apply.
P3 1(2) The changes made to this section by the act adding this
2paragraph shall apply to discharges of indebtedness that occur on
3or after January 1, 2014, and before January 1, 2015, and,
4notwithstanding any other law, no penalties or interest shall be
5due with respect to the discharge of qualified principal residence
6indebtedness during the 2014 taxable year, regardless of whether
7the taxpayer reports the discharge on his or her income tax return
8for the 2014 taxable year.
The amendments made by this act that conform to the
10amendments made by Section 102 of the Tax Increase Prevention
11Act of 2014 (Public Law 113-295) to Section 108 of the Internal
12Revenue Code, apply to qualified principal residence indebtedness
13that is discharged on and after January 1, 2014, and before January
141, 2015. The Legislature finds and declares that the amendments
15made by this act and the retroactive application contained in the
16preceding sentence are necessary for the public purpose of
17conforming state law to the amendments to the Internal Revenue
18Code as made by the Tax Increase Prevention Act of 2014 (Public
19Lawbegin delete 113-295)end deletebegin insert
113-295),end insert thereby preventing undue hardship to
20taxpayers whose qualified principal residence indebtedness was
21discharged on and after January 1, 2014, and before January 1,
222015, and do not constitute a gift of public funds within the
23meaning of Section 6 of Article XVI of the California Constitution.
This act is an urgency statute necessary for the
25immediate preservation of the public peace, health, or safety within
26the meaning of Article IV of the Constitution and shall go into
27immediate effect. The facts constituting the necessity are:
28In order to provide tax relief to distressed homeowners at the
29earliest possible time, it is necessary that this act take effect
30immediately.
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