Bill > S1791

This bill aims to provide relief for mortgage debt by allowing taxpayers to exclude from their gross income the income attributable to the discharge of debt on their principal residence, including debt reduced through mortgage restructuring and debt forgiven in connection with a foreclosure. The key provisions include a cap of $2 million (or $1 million for married filing separately) on the forgiven debt eligible for the exclusion, the requirement that the debt be "acquisition indebtedness" as defined in the Internal Revenue Code, and the reduction of the taxpayer's Massachusetts basis in the principal residence by the amount excluded from gross income. The bill also specifies that the exclusion does not apply to debt discharge related to services performed for the lender or factors unrelated to the residence's decline in value or the taxpayer's financial condition. The bill applies to discharges of indebtedness on or after January 1, 2013, and the commissioner is required to promulgate regulations to effectuate the provision.