CA SB907

Modifies California's Personal Income Tax Law to exclude up to $500,000 ($250,000 for married filing separately) of discharged qualified principal residence indebtedness from gross income for debts discharged on or after January 1, 2007.

Conforms state law to federal Tax Increase Prevention Act of 2014 and Protecting Americans from Tax Hikes Act of 2015 by extending mortgage debt forgiveness exclusions to debts discharged before January 1, 2017.

Waives penalties and interest for qualified principal residence indebtedness discharged during 2007, 2009, 2013, 2014, and 2015 taxable years, regardless of whether taxpayers reported the discharge on their returns.

Applies retroactively to debts discharged between January 1, 2014 and January 1, 2015, and between January 1, 2015 and January 1, 2017 (with exceptions for written agreements entered into before January 1, 2017).

Takes effect immediately as an urgency statute to provide timely tax relief to distressed homeowners.