Last week, Governor Schwarzenegger, vetoed a bill that would have kept California homeowners who had to short sell their homes or get a loan modification in 2009 from being taxed by California on the forgiven mortgage debt.  This bill would have aligned much of California’s tax code with the federal government’s tax code.  Schwarzenegger said he vetoed the bill because it contained an unrelated provision about tax refunds for California’s largest businesses.  However, even though he vetoed this bill, Schwarzenegger said he does support ending taxation of forgiven mortgage debt.   He asked the legislature to send him a bill that would forgive mortgage debt before April 15.


You can check out the actual legislation here