Bill Text: CA SB907 | 2015-2016 | Regular Session | Enrolled

California Senate Bill 907 (Prior Session Legislation)

Bill Title: Personal income taxes: gross income exclusion: mortgage debt forgiveness.

Spectrum: Bipartisan Bill

Status: (Vetoed) 2016-11-30 - Last day to consider Governor's veto pursuant to Joint Rule 58.5. [SB907 Detail]

Download: California-2015-SB907-Enrolled.html

BILL NUMBER: SB 907	ENROLLED
	BILL TEXT

	PASSED THE SENATE  AUGUST 31, 2016
	PASSED THE ASSEMBLY  AUGUST 31, 2016
	AMENDED IN ASSEMBLY  JUNE 23, 2016
	AMENDED IN SENATE  MARCH 28, 2016

INTRODUCED BY   Senator Galgiani
   (Principal coauthor: Senator Cannella)
   (Principal coauthor: Assembly Member Bonta)
   (Coauthor: Senator Nguyen)
   (Coauthors: Assembly Members Bigelow and Gordon)

                        JANUARY 25, 2016

   An act to amend Section 17144.5 of the Revenue and Taxation Code,
relating to taxation, and declaring the urgency thereof, to take
effect immediately.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 907, Galgiani. Personal income taxes: gross income exclusion:
mortgage debt forgiveness.
   The Personal Income Tax Law provides for modified conformity to
specified provisions of federal income tax 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, 2014, as
provided. The federal Tax Increase Prevention Act of 2014 extended
the operation of those provisions to debt that is discharged before
January 1, 2015. The federal Protecting Americans from Tax Hikes Act
of 2015 extended the operation of those provisions to debt that is
discharged before January 1, 2017, and provides that its discharge
provisions apply to specified written agreements entered into before
January 1, 2017.
    This bill would conform to that additional discharge provision
relating to specified written agreements and the federal extensions,
some of which would be applied retroactively. The bill would
discharge indebtedness for related penalties and interest and would
make legislative findings and declarations regarding the public
purpose served by the bill.
   This bill would declare that it is to take effect immediately as
an urgency statute.


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, relating to
qualified principal residence indebtedness, 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, 2009, or 2013 taxable year regardless
of whether or not the taxpayer reports the discharge on his or her
return for the 2007, 2009, or 2013 taxable year.
   (d) (1) The amendments made by Section 102 of the federal Tax
Increase Prevention Act of 2014 (Public Law 113-295) to Section 108
of the Internal Revenue Code, relating to income from discharge of
indebtedness, shall apply.
   (2) The changes made to this section by the act adding this
paragraph shall apply to discharges of indebtedness that occur on or
after January 1, 2014, and before January 1, 2015, and,
notwithstanding any other law, no penalties or interest shall be due
with respect to the discharge of qualified principal residence
indebtedness during the 2014 taxable year, regardless of whether the
taxpayer reports the discharge on his or her income tax return for
the 2014 taxable year.
   (e) (1) The amendments made by Section 151 of the federal
Protecting Americans from Tax Hikes Act of 2015 (Division Q of Public
Law 114-113) to Section 108 of the Internal Revenue Code, relating
to income from discharge of indebtedness, shall apply.
   (2) Notwithstanding any other law, no penalties or interest shall
be due with respect to the discharge of qualified principal residence
indebtedness during the 2015 taxable year, regardless of whether the
taxpayer reports the discharge on his or her income tax return for
the 2015 taxable year.
  SEC. 2.  (a) The amendments made by this act that conform to the
amendments made by Section 102 of the federal Tax Increase Prevention
Act of 2014 (Public Law 113-295) to Section 108 of the Internal
Revenue Code, relating to income from discharge of indebtedness,
apply to qualified principal residence indebtedness that is
discharged on and after January 1, 2014, and before January 1, 2015.
   (b) 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
federal Tax Increase Prevention Act of 2014 (Public Law 113-295),
thereby preventing undue hardship to taxpayers whose qualified
principal residence indebtedness was discharged on and after January
1, 2014, and before January 1, 2015, and do not constitute a gift of
public funds within the meaning of Section 6 of Article XVI of the
California Constitution.
  SEC. 3.  (a) The amendments made by this act that conform to the
amendments made by Section 151 of the federal Protecting Americans
from Tax Hikes Act of 2015 (Division Q of Public Law 114-113) to
Section 108 of the Internal Revenue Code, relating to income from
discharge of indebtedness, apply to qualified principal residence
indebtedness that is discharged on and after January 1, 2015, and
before January 1, 2017, except for any discharge of qualified
principal residence indebtedness that is subject to an arrangement
that is entered into and evidenced in writing before January 1, 2017,
in which case the amendments made by this act that conform to the
amendments made by Section 151 of the Protecting Americans from Tax
Hikes Act of 2015 (Division Q of Public Law 114-113) apply to
qualified principal residence indebtedness that is discharged after
January 1, 2017.
   (b) The Legislature finds and declares that the amendments made by
this act and the retroactive application contained in the preceding
sentence regarding debt discharged before January 1, 2016, are
necessary for the public purpose of conforming state law to the
amendments to the Internal Revenue Code as made by the federal
Protecting Americans from Tax Hikes Act of 2015 (Division Q of Public
Law 114-113), thereby preventing undue hardship to taxpayers whose
qualified principal residence indebtedness was discharged on and
after January 1, 2015, and before January 1, 2016, and do not
constitute a gift of public funds within the meaning of Section 6 of
Article XVI of the California Constitution.
  SEC. 4.  This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
   In order to provide tax relief to distressed homeowners at the
earliest possible time, it is necessary that this act take effect
immediately.