AMENDED IN SENIOR SENATE OCTOBER 27, 2009

SENIOR SENATE FEDERAL PROPOSAL NO. 4

INTRODUCED BY SENIOR SENATOR MACK

LEGISLATIVE COUNSEL'S DIGEST

SFP 4: TAXATION: SALE OF PRINCIPAL RESIDENCE

UNDER EXISTING LAW, CAPITAL GAINS TAXES ARE IMPOSED UPON THE SALE OF CAPITAL ASSETS.

THIS MEASURE WOULD MEMORIALIZE THE CONGRESS AND THE PRESIDENT TO ENACT LEGISLATION THAT WOULD ELIMINATE CAPITAL GAINS TAXES ON THE SALE OF A PRINCIPAL RESIDENCE BY A SENIOR CITIZEN 65 YEARS OF AGE AND OLDER.

VOTE: MAJORITY.

SFP 4: RELATING TO CAPITAL GAINS TAXES

WHEREAS, FEDERAL AND STATE INCOME TAX LAWS IMPOSE CAPITAL GAINS TAXES UPON THE SALE OF CAPITAL ASSETS; AND

WHEREAS, A TAXPAYER IS ALLOWED TO EXCLUDE FROM INCOME UP TO $250,000 ($500,000 FOR JOINT RETURNS) OF GAIN FROM THE SALE OF A QUALIFYING PRINCIPAL RESIDENCE, AND

WHEREAS, SENIORS ARE SUBJECT TO CAPITAL GAINS TAXES ON THE SALE OF THEIR HOME EVEN IF THEY MOVE TO ASSISTED LIVING UNITS, WHERE THERE MAY BE HEAVY UP FRONT FEEDS, AND

WHEREAS, THE DEATH OF A SPOUSE CREATES A DISPARITY IN TAX TREATMENT IN THAT AN ELDERLY COUPLE IS REQUIRED TO PAY CAPITAL GAINS TAXES UPON THE SALE OF THEIR HOME BUT A SURVIVING PARTNER CAN REDUCE HIS OR HER CAPITAL GAINS BY VIRTUE OF A STEPPED UP BASIS IN COMPUTING CAPITAL GAINS THAT IS ALLOWED UPON THE DEATH OF HIS OR HER SPOUSE; NOW, THEREFORE, BE IT

RESOLVED, BY THE SENIOR SENATE AND THE SENIOR ASSEMBLY, JOINTLY, THAT THE SENIOR LEGISLATURE OF THE STATE OF CALIFORNIA AT ITS 2009 REGULAR SESSION, A MAJORITY OF THE MEMBERS VOTING THEREFOR, HEREBY PROPOSES THAT LEGISLATION BE ENACTED TO ELIMINATE CAPITAL GAINS TAXES ON THE SALE OF A PRINCIPAL RESIDENCE BY A SENIOR CITIZEN OVER 65 YEARS OF AGE; AND BE IT FURTHER

RESOLVED, THAT THE SENIOR LEGISLATURE OF THE STATE OF CALIFORNIA RESPECTFULLY MEMORIALIZES THE CONGRESS AND THE PRESIDENT TO ENACT APPROPRIATE LEGISLATION THAT WOULD ADDRESS THE CONCERNS SET FORTH IN THIS MEASURE; AND BE IT FURTHER

RESOLVED, THAT A COPY OF THIS MEASURE BE TRANSMITTED TO THE PRESIDENT AND VICE PRESIDENT, THE SPEAKER OF THE HOUSE OF REPRESENTATIVES, THE CHAIRPERSONS OF THE HOUSE AND SENATE COMMITTEES ON AGING, AND TO EACH SENATOR AND REPRESENTATIVE FROM CALIFORNIA IN THE CONGRESS OF THE UNITED STATES.

RN 09 16342

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