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Mortgage Forgiveness Debt Relief Conformity Update

The federal Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, also qualifies for this relief.

For discharges occurring on or after Jan. 1, 2009, California does not conform to the federal provision. Generally speaking, under the current law, the amount of debt discharged is taxable to California. However, several bills pending in the Legislature would extend and modify California mortgage forgiveness debt relief to conform more to the federal law: AB 1779, SBX8 32 and SBX8 25.

Learn more or subscribe to “Legislation Information” for updates on pending legislation.

This entry was posted on Tuesday, March 2nd, 2010 at 1:13 pm and is filed under CalCPA Buzz. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

http://www.york-cpa.com/ David R. York, CPA MST

The CA legislature has been teasing the CA taxpayers with this for a long time. That stuff expired long ago and they have done nothing but complain about the bad economy. Let’s face it CA wants your money and they are happy to kick someone when they are down. These bills will die in committee just like the last bunch.
http://www.york-cpa.com David R. York, CPA MST

The CA legislature has been teasing the CA taxpayers with this for a long time. That stuff expired long ago and they have done nothing but complain about the bad economy. Let’s face it CA wants your money and they are happy to kick someone when they are down. These bills will die in committee just like the last bunch.
R J M

Maybe people need to be held accountable for a change. I am seeing far too much abuse taking place, and my perception is as though through they eye of a needle. As the old addage goes, “if you want to play you have to pay.”
R J M

Maybe people need to be held accountable for a change. I am seeing far too much abuse taking place, and my perception is as though through they eye of a needle. As the old addage goes, “if you want to play you have to pay.”
David M. Fogel, CPA

The last bill that would have provided conformity didn’t “die in committee.” Rather, AB 1580 would have provided partial conformity to IRC §108(h), but it was vetoed by Governor Schwarzenegger on 10/11/09 because of a provision inserted at the last moment that would have imposed a penalty for preparing an erroneous refund claim. Despite the veto, the Governor urged the Legislature to pass a conformity bill in the future. See the Governor’s veto message at http://gov.ca.gov/pdf/press/2009bills/AB1580_Calderon_Veto_Message.pdf
David M. Fogel, CPA

The last bill that would have provided conformity didn’t “die in committee.” Rather, AB 1580 would have provided partial conformity to IRC §108(h), but it was vetoed by Governor Schwarzenegger on 10/11/09 because of a provision inserted at the last moment that would have imposed a penalty for preparing an erroneous refund claim. Despite the veto, the Governor urged the Legislature to pass a conformity bill in the future. See the Governor’s veto message at http://gov.ca.gov/pdf/press/2009bills/AB1580_Calderon_Veto_Message.pdf
Sandra Carlos, CPA

I hope you are wrong David!
Sandra Carlos, CPA

I hope you are wrong David!