Discussion:COD in California for Riley2
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Discussion Forum Index --> Basic Tax Questions --> COD in California for Riley2
Discussion Forum Index --> Tax Questions --> COD in California for Riley2
| 7 May 2008 | |
| I noticed in a previous posting you had mentioned in CA that cancellation of debt on a residence is treated as additional sales proceeds and I wondered if you might be able to guide to where I might be able to find more information on this. Thanks for your help! | |
| 7 May 2008 | |
| California has not conformed to the federal provision for nonrecognition of COD income on a principal residence. A bill (SB 1055, Machado) is pending in the Legislature that would partially conform. For more information, see [1] | |
| 7 May 2008 | |
| JASCPA, when the borrower is not personally liable for the mortgage, the mortgage balance is the sales price in most distressed sales.
The first principle to remember is that the mortgage balance is treated as part of the sales price to the extent of the fair market value of the property. The second principal to remember is that the fair market value is never less than the principle balance on the nonrecourse mortgage secured by the property. Internal Revenue Code ยง 7701(g). This rule generally applies to any nonrecourse debt. Most purchase-money mortgages on California residential property (1-4 units) are nonrecourse. See California CCP Sec. 580b. Please note that CCP Sec. 580b does not apply to VA or FHA loans. Internal Revenue Service has a Fact Sheet on Foreclosures that discusses this concept in general. | |
Ken@seamann.com (talk|edits) said: | 13 August 2008 |
| Anyone have any information on California conforming yet? Above mentioned bill didn't make it. | |
Ken@seamann.com (talk|edits) said: | 13 August 2008 |
| It seems that SB1242 was withdrawn this spring in support of SB1055.
SB1055 was sent to 3rd reading yesterday w/ a unanimous vote to approve it. AB1918 has been sent to 2nd hearing after amendment, also this week. (Neither fully conform w/ Federal, BUT better than nothing. I believe both are being tagged as urgent, but ........... w/ California's money problems, what's the prognosis for passing. How is everyone handling these? Attempting the insolvantcy route.....?? | |
| 21 August 2008 | |
| As of 8/19 SB 1055 went to enrollment [2]. All that remains is the governor's signature. | |
