Tax relief on housing

The state legislature passed a measure to help homeowners who received mortgage modifications, had their homes foreclosed or sold their houses for less than they owed on their mortgages. The bill would prevent any canceled debt from being treated as taxable income. Congress had addressed the problem for federal taxes in 2007. From AP:

The Assembly and Senate passed the bill after removing a provision about tax fraud penalties that drew objections from Gov. Arnold Schwarzenegger. A spokesman for Schwarzenegger said the governor will sign the bill. But some Republicans continued to oppose the legislation because it introduced a variety of tax increases.