Today's Law As Amended


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SB-439 Personal income taxes: cancellation of indebtedness: mortgage debt forgiveness.(2013-2014)



As Amends the Law Today


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 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).
(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) 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) The changes made to this section by the act adding this subdivision 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.
SEC. 2.
 The amendments made by this act that conform to 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, apply to qualified principal residence indebtedness that is discharged on and after January 1, 2013, and before January 1, 2014. 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 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), thereby preventing undue hardship to taxpayers whose qualified principal residence indebtedness was discharged on and after January 1, 2013, and before January 1, 2014, and do not constitute a gift of public funds within the meaning of Section 6 of Article XVI of the California Constitution.
SEC. 3.
 Notwithstanding Section 13340 of the Government Code, and without regard to fiscal year, there is hereby continuously appropriated from the General Fund to the Franchise Tax Board those amounts necessary to make the payments required by this act to taxpayers who have included amounts in gross income by reason of the discharge of principal residence indebtedness that was discharged on and after January 1, 2013, and before January 1, 2014.