Joining the assault on the middle class family, Governor Jerry Brown has vetoed AB 99 (Perea), the bill that would have extended California’s partial conformity to the COD principal residence exclusion through December 31, 2014. Unfortunately, this means that taxpayers who had short sales or foreclosures on their principal residences in 2014 will not be able to use the principal residence exclusion on their California returns. However, taxpayers may still qualify for the insolvency exclusion to help avoid tax on that COD income.