Assembly Bill No. 1393
CHAPTER 152
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.
[ Approved by Governor July 21, 2014. Filed with Secretary of State July 21, 2014. ]
To apply the new treatment,
- Navigate to Screen 51 Modifications
- Check the appropriate box in Section AB 1393- Mortgage Forgiveness Debt Relief
LEGISLATIVE COUNSEL'S DIGEST
AB 1393, Perea. Personal income taxes: 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, 2013, as provided. The federal American Taxpayer Relief Act of 2012 extended the operation of those provisions to qualified principal residence indebtedness that is discharged before January 1, 2014.
This bill would conform to the federal extension, discharge indebtedness for related penalties and interest, and 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.
To enter the Cancelation of debt of qualified principal residence exclusion for federal purposes and generate an amount on line 21f, column c on Schedule CA:
- Go to Screen 14.1, Miscellaneous Income
- Scroll down to the Alimony and Other Income section
- Enter the applicable amounts under the Cancelation of Debt subsection in:
- Cancelation of debt (1099-C) code 6
- Qualified principal residence exclusion code 7
- Both entries are required to generate the exclusion on the Federal Form 1040
To enter a CA Short Sale and Cancelation of Debt per the FTB Tax News:
- Go to Screen 14.1, Miscellaneous Income
- Scroll down to the Alimony and Other Income section
- Enter the applicable amounts under the Cancelation of Debt subsection in:
- Cancelation of debt (1099-C) code 6
- Qualified principal residence exclusion code 7
- Check the box, COD income attributable to short sale pursuant to CCP section 580e [CA] code 180
- This field was added on the 02/19/14 update for a lender approved short sale in 2013 subject to CCP section 580e which will remove adjustment on the CA Schedule CA line 21f.