This post is a follow up to an earlier post about the state forgiving tax debt for those who did a short sale in lieu of foreclosure, had a home foreclosed, or those who modified their existing mortgage. The state of California was issuing tax notices to those folks in the aforementioned category because of the difference between the current mortgage balance and the loss. The Governor was preparing to sign a bill forgiving this debt and yesterday it became official law. So what this means to you is that this debt will be forgiven. But, I would still consult a tax professional to make sure that there are no hidden loopholes as the language can be confusing and there are restrictions. Also, if you signed a promissory note to the bank stating that you agreed to pay those monies back you definitely want to consult a professional. Take care.
Remember: BE IN THE KNOW!
Carl O
http://www.scribd.com/doc/29874005/No-More-State-Tax-on-Forgiven-Debt
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