APRIL 23, 2010
OUTDOORS
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GOOD NEWS ON CA FORGIVEN DEBT TAX
Photo by Ger Erickson
Donner Creek is funneled through a mini canyon along Mt. Diablo’s lower elevations. Strategic infusions of rain have kept the music of water echoing throughout the mountain in this memorable spring of 2010.
Outside from page 6A face. Here’s your ultimate picnic spot: below you the falls whoosh like wind in the trees. In addition to the water show, the trail takes you through corridors of violet shooting star, purple nightshade and lavender subdivisions of Chinese houses. Falls Trail feeds into Middle Trail. Continue down past the skeletal remains of manzanitas and clusters of burgundy-tinged Indian warrior. You’ll dead-end at Meridian Ridge Road. Go right, and shortly thereafter veer left onto Donner Canyon Road.
For a more private finale than the wide road trail can provide, look for a signpost on your right marked Hetherington Loop Trail. It’ll take you back down to those Donner Creek crossings you rock-hopped a couple hours earlier. Total mileage for the day: 6¼. Water. It enfolded us inside our mothers’ womb, revived our hominid ancestors as they stole sips along streams carving the primeval savannah. Our DNA is deeply encoded with its galvanizing sound and refreshing sensation. And now is the time to enjoy it up close – and close to home. To comment, visit www.thepress.net.
I’ve written in this column before about the “phantom income” tax, which is tax due on forgiven debt. This can apply if you have a short sale, foreclosure, loan modification where principal was reduced, or many other situations where someone forgives part or all of your debt. As confusing as most people think the issue is, it’s actually even more confusing, because when we say “tax,” do we mean federal or state tax? That’s right, you have to worry about BOTH of them, and for a while this year, the federal and state tax laws on this issue were quite different. Even if you met an exemption from paying the federal tax, you may have been subject to state tax. However, there is good news! A recent law that was just passed brings the California law mostly into line with the Federal law in regards to forgiven debt. This new law covers forgiven debt through 12/31/2012. The main differences between the federal and state laws are around the amount of
debt and tax relief. The federal limit on the amount of debt is $2,000,000 (filing jointly)/$1,000,000 (filing single) and they place no limit on the amount of debt relief. The state limit on the amount of debt is $800,000 (filing jointly)/$400,000 (filing single) and a limit on tax relief of up to $500,000 (filing jointly)/$250,000 (filing single). Please note that this does NOT mean that all forgiven debt up to the limits are now non-taxable. You still have to meet the federal requirements of the Mortgage Forgiveness Debt Relief Act of 2007 (mostly that it was your residence and that you didn’t pull money out beyond what you owed at the time you bought it) and/or that you meet one of the exemptions (insolvent, bankruptcy, etc.). For specifics to your situation, please consult a tax expert. If you have questions on any other real estate topic, call me at (925) 240-MOVE (6683). To search the MLS for free and view virtual tours of homes for sale, go to: www. SharpHomesOnline.com. Sharp Realty – Advertisement
Bill Grady, Principal 925-420-6003 office 925-813-0841 cell Email BillGrady@comcast.net
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