California Is A Community Property State

Owe $50,000 or more Unpaid Payroll Taxes?
Owe more than $20,000 in Income Taxes?
Call 877-829-8370 and get help today,
we’re experts in large tax problems

Only Tax Attorneys and CPAs will handle your case!

If you are married and your spouse is having tax problems, it is essential that you understand that California is a community property state. Community Property is a legal concept accepted by a California state law that creates a community upon marriage. All property acquired during the marriage is held as community property, with both the husband and the wife having a one-half interest in the community assets.

Free Consultation!
We can’t help until you contact us. Click here to fill out our simple
Tax Resolution form

As a result, the IRS can serve a Notice of Levy on a wife’s salary for the husbands separate liability. In a community property jurisdiction, most property acquired during the marriage (except for gifts or inheritances) is owned jointly by both spouses and is divided upon divorce, annulment or death. The law automatically presumes joint ownership in the absence of specific evidence that would point to a contrary conclusion for a particular piece of property.

The community property system is usually justified by the idea that such joint ownership recognizes the theoretically equal contributions of both spouses to the creation and operation of the family unit. Division of community property may take place by item, by splitting all items or by aan accepted value. In California, state law mandates a 50/50 division of community property.

Quasi-community property is a concept recognized by some community property states. For example, in California, quasi-community property is defined by statute as: “all real or personal property, wherever situated, acquired before or after the operative date of this code in any of the following ways: (a) By either spouse while domiciled elsewhere which would have been community property if the spouse who acquired the property had been domiciled in this state at the time of its acquisition. (b) In exchange for real or personal property, wherever situated, which would have been community property if the spouse who acquired the property so exchanged had been domiciled in this state at the time of its acquisition.”

To be perfectly clear, California is a community property state. This designation means that all property married couples acquire while living and based in California is community property. As opposed to community property, separate property is property owned separately by the husband or wife before marriage. It also includes all property acquired separately after marriage, such as gifts or inheritances. In addition, separate property includes money earned while living and based in a separate property state. All property declared separate property in a valid pre- or post-nuptial agreement is also separate property. Community property ends when either one of the spouses dies. It also ends when the decree of dissolution becomes final or when the couple separates with no intention of rejoining.

Illuminating the California view of Community Property, Chief Justice Roger J. Traynor of the Supreme Court of California wrote: “If funds used for acquisitions during marriage cannot otherwise be traced to their source and the husband who has commingled property is unable to establish that there was a deficit in the community accounts when the assets were purchased, the presumption controls that property acquired by purchase during marriage is community property. The husband may protect his separate property by not commingling community and separate assets and income. Once he commingles, he assumes the burden of keeping records adequate to establish the balance of community income and expenditures at the time an asset is acquired with commingled property.”

In California, property acquired while married in a non-community property jurisdiction does not become community property just because the married parties have moved to a community property jurisdiction. It is the new event of divorce or death while living in the community property state that allows that state to treat such property as quasi-community property.

Free Consultation!
We can’t help until you contact us. Click here to fill out our simple
Tax Resolution form

Community property has other important federal tax implications, which the Internal Revenue Service discusses in its Publication 555. In general, community property may result in lower federal capitol gains taxes after the death of one spouse when the surviving spouse then sells the property. Some states have created a newer form of community property called community property with right of survivorship. If you have questions about California Community Property laws and how they affect your tax situation, please call us. We can help to illuminate you on the benefits of Innocent Spouse Relief in relation to tax problems and the liability of California Community Property laws. When it comes to understanding the relationship between community property, innocent spouse relief and tax resolution, we are the experts, and we can help you today.