Last week the CA State Assembly finally gave final approval to state income tax relief to homeowners who sold their homes on short sales or obtained loan modifications from their lenders last year, (2013).  So if you filed a tax return with this discharge of debt as income to the state you may need file an amended tax return.  While the federal government exempts debt relief from taxation for mortgage debt foregiveness, and the state followed suit up to 2012, another bill was needed to extend this relief to 2013.  We finally received this relief last week with Senate Bill 30 passing the CA State Senate.