Bill Text: CA AB42 | 2013-2014 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Taxation: cancellation of indebtedness: mortgage debt forgiveness.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Introduced - Dead) 2014-02-03 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB42 Detail]

Download: California-2013-AB42-Amended.html

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BILL NUMBER: AB 42	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MARCH 4, 2013

INTRODUCED BY   Assembly Member Perea
    (   Coauthor:   Assembly Member  
Gray   ) 

                        DECEMBER 7, 2012

   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 42, as amended, Perea. Taxation: cancellation of indebtedness:
mortgage debt forgiveness.
   The Personal Income Tax Law conforms to specified provisions of
 the federal Mortgage Forgiveness Debt Relief Act of 2007, as
amended by the federal Emergency Economic Stabilization Act of 2008,
  federal 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, 2013, as provided.  The federal
American Taxpayer Relief Act of 2012 extended the operation of those
provisions to debt that is discharged before January 1, 2014. 

   This bill would make findings and declarations regarding mortgage
debt forgiveness and would state the intent of the Legislature to
enact legislation that would conform to federal law with regard to
any extension of the exclusion described above.  
   This bill would conform to the federal extension.  
   This bill would take effect immediately as a tax levy. 
   Vote: majority. Appropriation: no. Fiscal committee:  no
  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(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) The amendments made by Section 202 of the American Taxpayer
Relief Act of 2012 to Section 108 of the Internal Revenue Code shall
apply.  
   (c) 
    (d)  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.    This act provides for a tax levy within
the meaning of Article IV of the Constitution and shall go into
immediate effect.  
  SECTION 1.    The Legislature finds and declares
all of the following:
   (a) A homeowner can lose his or her job or become seriously ill
and then be unable to pay the monthly mortgage. In the resulting
short sale or foreclosure, the homeowner not only loses his or her
home, but may also be taxed on relief of indebtedness income that the
homeowner did not receive.
   (b) If the homeowner refinances his or her mortgage, as many
homeowners do, the nature of the debt is changed and the homeowner
may be personally liable for the payment of that debt.
   (c) Absent an extension of the debt forgiveness protections beyond
this year, homeowners will again be subject to taxation on income
they never actually received.  
  SEC. 2.    It is the intent of the Legislature to
enact legislation that would extend the operation of Section 17144.5
of the Revenue and Taxation Code, relating to the exclusion of the
discharge of qualified principal residence indebtedness from an
individual's income, to conform to any federal legislation that
extends the operation of this exclusion in federal income tax law.