Mortgage relief act goes to President
On December 20, 2007, the President signed H.R. 3648, the "Mortgage Forgiveness Debt Relief Act of 2007." The bill will help some taxpayers caught up in the sub-prime mortgage disaster. It includes the following provisions:
- Exclusion of up to $2 million of acquisition indebtedness on a principal residence. Effective for discharges incurred on or after January 1, 2007 and before January 1, 2010.
- A three year extension of the rule treating qualifying mortgage insurance premiums as deductible qualified residence interest.
- Exclusion of up to $500,000 on the sale of a principal residence by a surviving spouse who files as a single taxpayer if the sale occurs not later than two years after their spouse's death and the requirements for the $500,000 exclusion were met immediately before the spouse's death. Effective for sales after December 31, 2007.
- Increase the penalty for failure to file partnership returns, and impose a new penalty for failure to file S corporation returns, effective on the date of enactment. The new penalty is $85 per partner/shareholder per month for a maximum of 12 months.
- Increase from 115.75% to 117.25% the required installment amount for estimated tax payments by corporations with assets of $1 billion or more that is otherwise due in July, August, or September of 2012.
This legislation does not contain the AMT patch we have been waiting for.
California does not automatically conform to any of these changes. To conform, the legislature must enact conforming legislation. Historically, the California legislature has not enacted any tax legislation during the tax filing season. Spidell will work with our contacts to try to craft legislation that will be agreeable to legislators who have not been able to agree on conformity legislation over the past three years.
