On Tuesday, April 13, 2010, we sent our Tax News subscribers a newsflash on the recently signed SB 401, the Conformity Act of 2010. The Act changes California’s conformity date to the Internal Revenue Code from January 1, 2005, to January 1, 2009, for taxable years beginning on or after January 1, 2010, except for the retroactive provisions explained below. California’s conformity results in numerous substantive changes to the Personal Income Tax Law, the Administration of Franchise and Income Tax Law, and the Corporation Tax Law with respect to those areas of preexisting conformity that are subject to changes under federal laws enacted after January 1, 2005.
The following provisions of the new law affect taxable years beginning prior to January 1, 2010. We will provide additional updates about changes to the law for taxable years beginning on or after January 1, 2010.
Mortgage Forgiveness Debt Relief Extended
California law conforms, with modifications, to federal mortgage forgiveness debt relief for discharges occurring in tax 2007 through 2012. For more details regarding the mortgage forgiveness debt relief extension and how to file, go to our updated Mortgage Forgiveness Debt Relief webpage.
Income Exclusion of Federal Energy Grants
The Act provides that federal energy grants provided in lieu of federal energy credits are excluded from California gross income and alternative minimum taxable income of individuals and businesses. The income exclusion is applicable for any taxable year and is thus retroactive in its application.
Hokie Spirit Memorial Fund Exclusion
The Act allows a California taxpayer to exclude from gross income any amount received from the Virginia Polytechnic Institute and State University, out of amounts transferred from the Hokie Spirit Memorial Fund established by the Virginia Tech Foundation. The income is excluded from gross income for any taxable year and is thus retroactive in its application.