Good Morning Gentle Readers,
I suspect that California will eventually conform to federal law. It is probably best to wait until the eleventh hour to file your Ca tax return if you're in this boat. More on that here.
Two bills are pending in the Legislature that would extend and modify California mortgage forgiveness debt relief to conform more to the federal law: AB 1779 and SBX6 14. (SBX8 32, a bill passed by the Legislature on March 16, 2010, would have extended California mortgage forgiveness debt relief; however, that bill was vetoed by Governor Schwarzenegger on March 25, 2010.)
Please note that the Governator did not veto the bill because he is against mortgage debt cancellation tax relief.
As Ever,
TWC