Amended in Senate June 4, 2015

Amended in Senate May 14, 2015

Senate Bill No. 150

Introduced by Senators Nguyen and Huff

(Coauthors: Senators begin insert Bates, end insert Berryhill, begin insert Fuller, end insert Morrell, and Vidak)

begin insert

(Coauthors: Assembly Members Chávez and Mathis)

end insert

January 29, 2015

An act to add Section 17144.7 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

SB 150, as amended, Nguyen. Personal Income Tax Law: exclusion: student loan debt forgiveness.

The Personal Income Tax Law provides for various exclusions from gross income, including an exclusion for the amount of student loan indebtedness repaid or canceled pursuant to a specified federal law.

This bill would exclude from gross income the amount of student loan indebtedness discharged on or after January 1, 2015, for an eligible individual who is granted a discharge under specified agreements, as provided.

This bill would take effect immediately as a tax levy.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

SECTION 1.  

Section 17144.7 is added to the Revenue and
Taxation Code, to read:

17144.7.  

(a) Section 108(f)(1) of the Internal Revenue Code
is modified to additionally provide that in the case of an individual,
gross income does not include any amount that, but for this section,
would be includable in gross income by reason of the discharge,
in whole or in part, of any student loan if the individual is an
eligible individual for the taxable year.

(b) Section 108(f)(2) of the Internal Revenue Code begin insert , relating to
student loan, end insert is modified to additionally provide that a student
loan means a student obligation note or other debt evidencing a
loan to any individual for the purpose of attending a for-profit
higher education company or for the purpose of consolidating or
refinancing a loan used to attend a for-profit higher education
company, which is either a guaranteed student loan, an educational
loan, or a loan eligible for consolidation or refinancing under Part
B of Title IV of the Higher Education Act of 1965, as amended
(20 U.S.C. Sec. 1071 et seq.).

(c) For purposes of this section, an individual is an eligible
individual for a taxable year if either of the following apply during
the taxable year:

(1) The individual is granted a discharge of any student loan
pursuant to the discharge agreement.

(2) The individual is granted a discharge of any student loan
pursuant to paragraph 23 of the William D. Ford Federal Direct
Loan Program Borrower’s Rights and Responsibilities Statement
because of either of the following:

(A) The individual could not complete a program of study
because the school closed.

(B) The individual successfully asserts that the school did
something wrong or failed to do something that it should have
done.

(d) For purposes of this section, “discharge agreement” means
the agreement between ECMC Group, Inc., Zenith Education
Group, and the Consumer Financial Protection Bureau concerning
the purchase of certain assets of Corinthian Colleges, Inc., dated
February 2, 2015.

(e) This section shall apply to discharges of indebtedness
occurring on or after January 1, 2015.

SEC. 2.  

This act provides for a tax levy within the meaning
of Article IV of the Constitution and shall go into immediate effect.