BILL NUMBER: AB 1779	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MAY 3, 2010

INTRODUCED BY   Assembly Member Niello
    (   Coauthors:   Assembly Members 
 Adams,   Bill Berryhill,   Blakeslee, 
 Conway,   DeVore,   Fuller,   Gaines,
  Garrick,   Gilmore,   Hagman, 
 Harkey,   Jeffries,   Knight,  
Nestande,   Nielsen,   Silva,  Smyth,
  and Villines   ) 
    (   Coauthors:   Senators   Cox
  and Huff  ) 

                        FEBRUARY 9, 2010

   An act to amend Section 17144.5 of the Revenue and Taxation Code,
relating to taxation, to take effect immediately, tax levy.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1779, as amended, Niello. Taxation: cancellation of
indebtedness: mortgage debt forgiveness.
   (1) The Personal Income Tax Law  conforms   ,
in modified conformity  to specified provisions of the federal
Mortgage Forgiveness Debt Relief Act of 2007,  relating to
the exclusion of   allows an exclusion from a taxpayer's
income for  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   2009  , as provided. The
Emergency Economic Stabilization Act of 2008 extended the operation
of those  federal  provisions to debt that is discharged
before January 1, 2013.
   This bill would provide further conformity to those federal acts,
 including allowance of the exclusion for debt that is discharged
before 2013,  as provided.
   (2) 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 17144.5 of the Revenue and Taxation Code is
amended to read:
   17144.5.  (a) Section 108 of the Internal Revenue Code, relating
to income from discharge of indebtedness, as amended by Section 2 of
the Mortgage Forgiveness Debt Relief Act of 2007 (Public Law
110-142), and as amended by Section 303 of the Emergency Economic
Stabilization Act of 2008 (Public Law 110-343), shall apply, except
as otherwise provided.
   (b) 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.
  SEC. 2.  The Legislature finds and declares that the mortgage debt
tax relief allowed to taxpayers in connection with the discharge of
qualified principal residence indebtedness, as described in this act,
serves a public purpose and does not constitute a gift of public
funds within the meaning of Section 6 of Article XVI of the
California Constitution.
  SEC. 3.  This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.