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Bloomberg Tax
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Detailed Analysis
I. Introduction
II. Summary of Community Property Law
Introductory Material
A. Origins of Community Property
B. Community Property Jurisdictions
C. Existence of Marriage
D. Attributes of Community Property
1. Equal Management Power
2. Acquisition
E. Attributes of Separate Property
1. Description
2. Acquisition
F. Combined Community and Separate Property
1. Improvements
2. Acquisitions over Time
G. Debts and Liabilities
H. Acquisitions While Living Separate and Apart
I. Dissolution of the Community
J. Choice of Law Problems
K. Federal Preemption
L. Alaska Community Property Act
III. Income Taxation of Community Property
A. Importance in Estate Planning
B. Income Tax Return for Year of Death
1. Return
2. Gross Income: Joint Return
3. Deductions
a. Medical Expenses
b. Contributions, Taxes, and Other Deductible Expenses
4. Portion of Joint Tax Liability Attributable to Decedent
5. Withholding; Estimated Payments
6. Surviving Spouse's Return
C. Stepped-Up Basis
1. Carryover Basis
2. Community Property - Step Up in Basis for Surviving Spouse's One-Half Share of Community Property
3. Income in Respect of a Decedent
D. Holding Period
IV. Estate Tax Consequences
A. Property Owned at Death
B. Community and Separate Property
1. “Expectant Interest†Community Property
2. New Mexico Community Property
3. Community Property Passing at a Death Occurring Between October 21, 1942 and December 31, 1948
4. Community Property Created by the Commingling of Separate Property
5. Community Income Arising out of Separate Property
6. All Other Community Property
C. Effect of Interspousal Agreements
D. Transfers by Will and by Intestacy
E. Reliance upon Record Title
F. Federal Preemption Property
G. Character of the Income from and Reinvestments in Property
H. Effect of Dower and Curtesy Rule
I. Transfers Within Three Years (or in Contemplation) of Death
J. Incomplete Transfers
1. Transfer with Retained Life Estate
a. General Rule
b. Community Character of Income from Separate Property
c. Character of the Power of Management
d. The Widow's Election
e. The Danger of Converting Community Property into Separate Property
2. Transfers to Take Effect at Death
3. Revocable Transfers
K. Annuities
L. Joint Interests
1. General Rule
2. Survivorship in Joint Tenancy Community Property
3. Conversion of Joint Tenancy Community Property into Separate Property
4. Federal Preemption and Joint Tenancy Property
5. Effect of § 811(e) of the 1939 Code
6. Decedents Dying After 2009
M. Powers of Appointment
1. Powers Conferred upon the Wife
2. Powers Conferred upon the Husband-Manager
N. Life Insurance
1. Life Insurance Proceeds Receivable by the Executor - § 2042(1)
2. Life Insurance Proceeds Receivable by Other Beneficiaries - § 2042(2)
3. Imputed Incidents of Ownership - Regs. § 20.2042-1(c)(6)
4. Inclusion in Gross Estate of Noninsured Spouse Who Predeceases Insured - § 2033
5. Inclusion of Proceeds of Policy in Gross Estate of Noninsured Spouse Who Survives Insured - § § 2033, 2036–2038, and 2041
6. Inclusion of Proceeds of Policy Transferred by Insured Within Three Years of Death - § 2035
7. Characterization of Interests in Life Insurance Policies and Proceeds Under Local Law
a. In General
b. Apportionment Theory
c. Inception-of-Title Theory
d. Term Life Insurance: Risk Payment Doctrine
8. Simultaneous Death
9. Caveat: Effect of the Revenue Act of 1942
O. Marital Deduction Property - § 2044
P. Expenses, Indebtedness, and Taxes - § 2053
1. Funeral Expenses
2. Administration Expenses
3. Claims, Mortgages, and Other Encumbrances
Q. Losses - § 2054
R. Transfers for Public, Charitable, and Religious Uses - § 2055
S. The Marital Deduction - § 2056
1. The Law Prior to 1976
2. 1976 Liberalization of the Marital Deduction
3. The Special Definition of Community Property
4. The Law After 1981
5. Reduction of Marital Deduction in Widow's Election Cases - § 2056(b)(4)
6. Credit for Tax on Prior Transfers - § 2013
T. Former Estate Tax on Excess Accumulations
U. “Temporary†Estate Tax Repeal
V. Gift Tax Considerations
A. Transfers of Property by Gift
1. General Rule
2. Repealer Jurisdictions
3. Gifts Made Between January 1, 1943 and April 2, 1948
B. Forms of Transfer
1. Conversions into Separate Property
2. Commingling
3. Joint Ownership Forms
a. Survivorship Community Property
b. Agreements Governing Disposition of Community Property upon Death of a Spouse
c. Transfer of Community Property into Joint Tenancy with Right of Survivorship
d. Transfer of Community Property into Tenancy in Common
e. Agreements Regarding Character of Future Earnings
4. Disclaimers - § 2518
C. Incomplete Transfers
1. Effect of State Law Restrictions on Transfer of Community Property
2. Transfers to Revocable Trusts
D. Consideration
1. In General
2. Divorce and Annulment - § 2516
3. The Widow's Election
a. Pre-October 9, 1990 Rules
b. Post-October 8, 1990 Rules
c. Income Tax Consequences
E. Annuities - Former § 2517
F. Powers of Appointment - § 2514
G. Life Insurance
1. In General
2. Transfers by the Surviving Spouse at the Death of the Insured
H. Deductions
1. The Charitable Deduction - § 2522
2. The Marital Deduction Before 1982
3. The Marital Deduction After 1981 - § 2523
VI. The Generation-Skipping Transfer (GST) Tax
A. Introduction
B. GST Tax - 1976 Version
C. GST Tax - 1986 Version
D. Temporary “Repeal†for 2010 Transfers
E. Community Property Aspects
VII. Valuation
Introductory Material
A. Flower Bonds
B. Valuation Setoff Under § 2043; Application of Actuarial Tables
C. Special Use Valuation - § 2032A
D. Minority and Fractional Interest Discounts
Working Papers
Table of Worksheets
Other Sources
Worksheet 1 IRS Publication 555, Federal Tax Information on Community Property
Worksheet 2 Uniform Disposition of Community Property Rights at Death Act
Worksheet 3 Representative State Statutes
Worksheet 4 Community Property Agreement
Bibliography
OFFICIAL
Statutes
Regulations
Treasury Rulings
Cases:
UNOFFICIAL
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Periodicals:
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