COD income from student loans - Spidell

COD income from student loans

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Message Board COD income from student loans

This topic contains 2 replies, has 3 voices, and was last updated by Anthony Gales 3 months, 3 weeks ago.

  • Author
  • #170717
    Jack Kaplan

    I have a client whose spouse passed away in 2017 and received a 1099-C for the spouse’s cancelled student loan debt. I treated the COD income as Federal and California taxable. The July 2019 CA tax letter on page 6 re: TCJA conformity says:

    “California conforms to the TCJA provision allowing taxpayers to exclude the amount of student loan indebtedness discharged on or after December 31, 2011, due to the death or disability of the student. Unlike federal law, the California exclusion is available indefinitely. Federal law only allows the exclusion for the 2018 through 2025 tax years”.

    Is the 2011 reference above correct? If so, appears that I need to amend the CA return to exclude it from income. Additionally, was this exclusion from income available in 2017 or was this part of the TCJA conformity that just passed? Thanks for any feedback.

  • #170756
    Sandy Weiner

    Thank you for bringing this to our attention. The 2011 date is incorrect. It should be after December 31, 2018. See R&TC Sec. 17144.8. We’ll run a correction story in the next issue.

  • #172331
    Anthony Gales

    Isn’t the exclusion only applicable on the death of the student and not on the death of the parent/spouse/borrower?