The Federal Tax Code is complicated enough. As a practicing tax professional in California, it would be nice if California conformed to the Federal Code. On Friday, Governor Schwarzenegger signed AB 115, putting California into conformity with more of the Federal Code. Provision include:
· For 2005 (and beyond), California conforms to the Federal definition of qualified child, filing status, and dependency exemption;
· For 2006 (and beyond), California has a liberalized student loan deduction; and
· California conforms to IRC §179 (to $25,000)
However, California treats these provisions differently:
· No Health Savings Accounts (HSAs);
· No special PAL treatment for real estate professionals; and
· Differences in §179 treatment.
Of course, Congress is still in session (the State Legislature has recessed for the year) so there is a possibility that we’ll see more changes out of Washington.