Personal income tax: gross income exclusion: discharge of qualified principal residence indebtedness: federal disaster areas.

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 gross income if that debt is discharged after January 1, 2007, and before January 1, 2014, as provided. This bill would provide that discharges of qualified principal residence indebtedness occurring on or after January 1, 2017, and before January 1, 2019, due to the loss of a principal residence within a federally declared disaster area, are also excluded from an individual's gross income. The bill would discharge indebtedness for related penalties and interest. The bill would also make other nonsubstantive changes. The bill would require the Legislative Analyst's Office to collaborate with the Franchise Tax Board to review the effectiveness of the above-described exclusion and, on or before January 1, 2021, submit a report of the review to the Legislature, as provided. Existing state constitutional law prohibits the Legislature from making any gift, or authorizing the making of any gift, of any public money or thing of value to any individual, association, municipal corporation, or any other corporation. The bill would make certain legislative findings and declarations that preventing undue hardship to taxpayers whose qualified principal residence indebtedness was discharged due to the loss of a principal residence within a federally declared disaster area serves a public purpose, as provided. This bill would declare that it is to take effect immediately as an urgency statute.