Bill Text: CA AB2426 | 2013-2014 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Income taxes: education savings accounts.

Spectrum: Slight Partisan Bill (Republican 5-3)

Status: (Introduced - Dead) 2014-05-23 - Joint Rule 62(a), file notice suspended. (Page 5065.) In committee: Set, second hearing. Held under submission. [AB2426 Detail]

Download: California-2013-AB2426-Amended.html

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BILL NUMBER: AB 2426	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 1, 2014

INTRODUCED BY   Assembly Member Nestande
    (   Coauthor:   Assembly Member  
Allen   ) 

                        FEBRUARY 21, 2014

   An act  to add Section 17141.1 to the Revenue and Taxation
Code,   relating to taxation  , to take effect immediately,
tax levy  .



	LEGISLATIVE COUNSEL'S DIGEST


   AB 2426, as amended, Nestande. Income taxes: education savings
accounts.
   The Personal Income Tax Law excludes from gross income
distributions from a Coverdell  Education Savings Account
  education savings account  , provided the
distributions are used for qualified education expenses, as provided.

   This bill would  state the intent of the Legislature to
increase the benefits related to the exclusion for distributions from
an education savings accounts by allowing a deduction for
contributions to an education savings account, as provided 
 allow as an exclusion from gross   income those amounts
contributed to a Coverdell education savings account, up to $750 per
taxable year, as provided. This bill would impose a penalty upon a
taxpayer of 2.5% for unauthorized distributions from the account, as
specified  . 
   This bill would take effect immediately as a tax levy. 
   Vote: majority. Appropriation: no. Fiscal committee:  no
  yes  . State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION   1.    Section 17141.1 is added to
the   Revenue and Taxation Code   , to read: 

   17141.1.  (a) Notwithstanding any other provision of this part or
Part 11 (commencing with Section 23001) to the contrary, any amount
contributed by a taxpayer during the taxable year to a Coverdell
education savings account, not to exceed seven hundred fifty dollars
($750) per taxable year, shall not be includable in the gross income
of the taxpayer, except as otherwise provided in this section.
   (b) For purposes of this section:
   (1) "Coverdell education savings account" shall have the same
meaning as that term is defined by Section 530 of the Internal
Revenue Code.
   (2) "Dependent" shall have the same meaning as that term is
defined by Section 152 of the Internal Revenue Code.
   (3) "Qualified education expenses" shall have the same meaning as
that term is defined by Section 530 of the Internal Revenue Code.
   (c) (1) Any amount withdrawn or distributed from a Coverdell
education savings account shall subject the taxpayer to a penalty in
an amount equal to 2.5 percent of the payment or distribution, unless
the payment or distribution is made to pay for the qualified
education expenses of the taxpayer that established the account or
his or her spouse or their dependents.
   (2) If the withdrawal or distribution from a Coverdell education
savings account is not used to pay for qualified education expenses
then any amount previously excluded from gross income pursuant to
this section shall be included in a taxpayer's gross income for the
taxable year in which the amount was excluded and the taxpayer shall
be liable for any increase in tax attributable to that inclusion.
   (d) Notwithstanding any other provision of this part, the transfer
of a taxpayer's interest in a Coverdell education savings account to
his or her former spouse under a dissolution decree or under a
written instrument incident to a dissolution is not to be considered
a taxable transfer made by that taxpayer, as long as the transferred
moneys are deposited into another Coverdell education savings account
established by the former spouse. 
   SEC. 2.    This act provides for a tax levy within
the meaning of Article IV of the Constitution and shall go into
immediate effect.  
  SECTION 1.    It is the intent of the Legislature
to enact legislation to increase the benefits of the current gross
income exclusion for individual taxpayers for distributions from a
Coverdell Education Savings Account, where the distributions are
spent on qualified educational expenses at public and private
schools, colleges, and universities that include tuition, fees,
books, supplies, equipment, and room and board, by allowing an
above-the-line deduction, not to exceed seven hundred fifty dollars
($750) per taxable year for each designated beneficiary, for
contributions made to an education savings account.