Tax News

CCH (cch.taxgroup.com) reports:

  Legislation has been enacted that partially conforms California personal income tax law to federal amendments made by the Mortgage Forgiveness Debt Relief Act of 2007 (P.L. 110-142) allowing an exclusion from gross income for discharge of an individual's qualified principal residence indebtedness. However, the California exclusion is limited to indebtedness discharged in the 2007 and 2008 calendar years, while the federal exclusion applies to indebtedness discharged in 2007 through 2009. Also, the amount of the California exclusion is limited to $250,000 ($125,000 in the case of a married individual filing separately), and "qualified principal residence indebtedness" is defined for purposes of the California 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) provided under federal law. Notwithstanding any other law to the contrary, no penalties or interest will be due with respect to the discharge of any qualified principal residence indebtedness during the 2007 taxable year, regardless of whether the taxpayer reports the discharge on his or her return for the 2007 taxable year.

Ch. 282 (S.B. 1055), Laws 2008, effective September 25, 2008, and applicable as noted above.