Short Sale Tax Looked Over in California

The state of California is one of the only states in the nation that requires that home owners who sell their home pay state taxes on any gain received in a short sale.  Arnold Schwarzenegger has give the  Californa legislature notice that they need to come to the table and come up with a bill that will allow Californai residents to not pay taxes on any capital gain from the sale of their home in a short sale situation.  Currently, the legislature has a bill that they wanted the Governer to sign that was tied to business on which business would be taxed. That bill would include a provision that creates penalties for business and wealthy tax payers whoe cliam higher tax refunds than they know  they're actually entitled to.   Governer Schwarzenegger wants that portion stripped out.  He wants a stand a lone short sale bill which will help the average homeowner neededing to short sale their home.   We will see what happens.