AB 2234, as amended, Steinorth. Personal income taxes: gross income exclusion: qualified principal residence indebtedness.
The Personal Income Tax Law provides for modified conformity to specified provisions of federal income tax law relating to an exclusion of the amount of the discharge of qualified principal residence indebtedness, as defined, from an individual’s gross income if that debt is discharged after January 1, 2007, and before January 1, 2014, as provided.
This bill would extend this exclusion
begin delete indefinitelyend delete and would also apply this exclusion retroactively to discharges of indebtedness that occurred on or after January 1, 2014, and before January 1, 2016. The bill would also provide that no penalties or interest with respect to the discharge of qualified principal residence indebtedness during the 2014 and 2015 taxable years would be due, and would make legislative findings and declarations regarding the public purpose served by the bill.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 17144.5 of the Revenue and Taxation
2Code is amended to read:
begin delete(1)end delete begin delete end deleteSection 108(a)(1)(E) of the Internal Revenue
4Code, is modified to provide that the amount excluded from gross
5income shall not exceed $500,000 ($250,000 in the case of a
6married individual filing a separate return).
7(2) Section 108(a)(1)(E) of the Internal Revenue Code, is
8modified to delete “which is discharged before January 1, 2015.”
9(b) Section 108(h)(2) of the Internal Revenue Code, relating to
10qualified principal residence indebtedness, is modified by
11substituting the phrase “(within the meaning of section
12163(h)(3)(B), applied by substituting ‘$800,000 ($400,000’ for
13‘$1,000,000 ($500,000’ in clause (ii) thereof)” for the phrase
14“(within the meaning of section 163(h)(3)(B), applied by
15substituting ‘$2,000,000 ($1,000,000’ for ‘$1,000,000 ($500,000’
16in clause (ii) thereof)” contained therein.
17(c) This section shall apply to discharges of indebtedness
18occurring on or after January 1, 2007, and, notwithstanding any
19other law to the contrary, no penalties or interest shall be due with
20respect to the discharge of qualified principal residence
21indebtedness during the
begin delete 2007 or 2009end delete taxable
22year regardless of whether or not the taxpayer reports the discharge
23on his or her return for the
begin delete 2007 or 2009end delete
24 taxable year.
amendments made by Section 202 of the American
26Taxpayer Relief Act of 2012 (Public Law 112-240) to Section 108
27of the Internal Revenue Code shall apply.
28(e) The changes made to this section by Chapter 152 of the
29Statutes of 2014 shall apply to discharges of indebtedness that
30occur on or after January 1, 2013, and before January 1, 2014, and,
31notwithstanding any other law, no penalties or interest shall be
32due with respect to the discharge of qualified principal residence
33indebtedness during the 2013 taxable year, regardless of whether
P3 1the taxpayer reports the discharge on his or her income tax return
2for the 2013 taxable year.
3(f) The changes made to this section by the act adding this
4subdivision shall apply to discharges of indebtedness that occur
5on or after January 1, 2014, and notwithstanding any other law,
6no penalties or interest shall be due with respect to the discharge
7of qualified principal residence indebtedness during the 2014 or
82015 taxable year, regardless of whether the taxpayer reports the
9discharge on his or her income tax return for the 2014 or 2015
The Legislature finds and declares that the amendments
22made by this act and the retroactive application of the exclusion
23for qualified principal residence indebtedness that is discharged
24on or after January 1, 2014, and before January 1, 2016, are
25necessary for the public purpose of preventing undue hardship to
26taxpayers whose qualified principal residence indebtedness was
27discharged between those dates, and do not constitute a gift of
28public funds within the meaning of Section 6 of Article XVI of
29the California Constitution.