Tax News

CCH (cch.taxgroup.com) reports:

  A bill passed by the California Legislature would conform California personal income tax law to federal amendments made by the Mortgage Forgiveness Debt Relief Act of 2007 (Public Law 110-142) that allow a personal income taxpayer to exclude from his or her gross income the discharge of the individual's qualified principal residence indebtedness in the 2007 through 2009 calendar years. However, if enacted , the bill would limit the California exclusion to indebtedness discharged in the 2007 and 2008 calendar years only. Additional provisions would limit the amount of the exclusion to $250,000 ($125,000 in the case of a married individual filing separate) and would define "qualified principal residence indebtedness" for purposes of the exclusion to mean an individual's qualified acquisition indebtedness of up to $800,000 ($400,000 in the case of a married individual filing separately), rather than the $2 million ($1 million in the case of a married individual filing separately) limitation provided under federal law. The exclusion would be applicable for California personal income tax purposes beginning with the 2007 taxable year.

S.B. 1055, as enrolled, August 19, 2008