Amended in Assembly September 11, 2015

Amended in Senate June 22, 2015

Amended in Senate June 4, 2015

Amended in Senate May 14, 2015

Senate BillNo. 150


Introduced by Senators Nguyen and Huff

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

(Coauthors: Assembly Membersbegin delete Chávez,end deletebegin insert Brough, Chávez, Cristina end insertbegin insertGarcia,end insert Mathis, and Olsen)

January 29, 2015


An act to addbegin insert and repealend insert Section 17144.7begin delete toend deletebegin insert ofend insert 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,begin insert and before January 1, 2020,end insert for an eligible individual who is granted a discharge under specified conditions, 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:

P2    1

SECTION 1.  

Section 17144.7 is added to the Revenue and
2Taxation Code
, to read:

3

17144.7.  

(a) Section 108(f)(1) of the Internal Revenue Code
4is modified to additionally provide that in the case of an individual,
5gross income does not include any amount that, but for this section,
6would be includable in gross income by reason of the discharge,
7in whole or in part, of any student loan if the individual is an
8eligible individual for the taxable year.

9(b) Section 108(f)(2) of the Internal Revenue Code, relating to
10student loan, is modified to additionally provide that a student loan
11means a student obligation note or other debt evidencing a loan to
12any individual for the purpose of attending a for-profit higher
13education company or for the purpose of consolidating or
14 refinancing a loan used to attend a for-profit higher education
15company, which is either a guaranteed student loan, an educational
16loan, or a loan eligible for consolidation or refinancing under Part
17B of Title IV of the Higher Education Act of 1965, as amended
18(20 U.S.C. Sec. 1071 et seq.).

19(c) For purposes of this section, an individual is an eligible
20individual for a taxable year if any of the following apply during
21the taxable year:

22(1) The individual is granted a discharge of any student loan
23pursuant to the discharge agreement.

24(2) The individual is granted a discharge of any student loan
25pursuant to paragraph 23 of the William D. Ford Federal Direct
26Loan Program Borrower’s Rights and Responsibilities Statement
27because of either of the following:

28(A) The individual could not complete a program of study
29because the school closed.

30(B) The individual successfully asserts that the school did
31something wrong or failed to do something that it should have
32done.

33(3) The individual attended a Corinthian Colleges, Inc. school
34on or before May 1, 2015, is granted a discharge of any student
35loan made in connection with attending that school, and that
36discharge is not covered by paragraph (1) or (2).

37(d) For purposes of this section, “discharge agreement” means
38the agreement between ECMC Group, Inc., Zenith Education
P3    1Group, and the Consumer Financial Protection Bureau concerning
2the purchase of certain assets of Corinthian Colleges, Inc., dated
3February 2, 2015.

4(e) This section shall apply to discharges of indebtedness
5occurring on or after January 1,begin delete 2015.end deletebegin insert 2015, and before January
61, 2020.end insert

begin insert

7(f) This section shall remain in effect only until December 1,
82020, and as of that date is repealed.

end insert
9

SEC. 2.  

This act provides for a tax levy within the meaning
10of Article IV of the Constitution and shall go into immediate effect.



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