Community Property: Estate and Income Tax Issues

Preserving Community Property Status Until Death, Filing Separate Returns, IRS Challenges

Recording of a 110-minute CPE webinar with Q&A


Conducted on Thursday, May 14, 2020

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will explain the benefits and caveats of holding community property for tax practitioners and advisers working with mobile clients. The panel will discuss identifying community property and helping clients retain or acquire community property status, when beneficial, along with the income and transfer tax reporting problems that come with this holding structure.

Description

Currently, there are nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Alaska's community property status is elective. Community property states treat property as if each party owns a one-half interest. There are profound differences in the treatment of community property for estate and income tax purposes compared with other ownership structures.

The date of acquisition determines the ownership structure of community property, which will generally retain its character after a relocation, divorce, or death. In community property states, parties have separate ownership rights in property acquired before marriage, while property acquired during a marriage is jointly owned, with some exceptions. Income tax preparers need to understand when to file separate tax returns since, in community property states, income is split equally between spouses.

A significant benefit of holding community property at death is getting a full basis step-up under 1014 (b)(6). At the death of the first spouse, the second spouse gets to step-up both halves of the property to fair market value. Residents of community property states may want to convert common law property to community property. Tax advisers should consider steps to preserve the benefits of community property ownership until death as well as the non-tax implications of doing so.

Listen as our panel of community property experts guides you through the process of identifying community property, the income and estate tax implications of holding community property, and steps to take to reap the tax benefits of this ownership structure.

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Outline

  1. Community property overview
  2. Other real estate ownership structures
  3. Estates and community property
  4. Income tax and community property
  5. Reporting issues: Forms 706, 709, and 1040
  6. Recent cases

Benefits

The panel will cover these and other critical issues:

  • What practitioners need to know to advise clients living in, or previously from, community property states
  • When taxpayers may benefit from filing separate returns in community property states
  • When it is tax-advantageous to preserve community property status?
  • What are the estate and income tax reporting issues for community property?
  • IRS challenges to ownership structure
  • Community property issues and complications in tax controversy matters

Faculty

Howard, Ernest
Ernest F. Howard, CPA

Sole Proprietor

Mr. Howard has been in practice since 1978, offering a full range of accounting, tax, and business consulting services,...  |  Read More

Loos, Joan
Joan E. Loos

Partner
Stegmeier Gelbart Schwartz & Benavente

Ms. Loos has lectured to study groups on topics such as jurisdiction issues and Judgment enforcement, and has been a...  |  Read More

Rice, David Lee
David Lee Rice

Managing Partner
The Law Firm of David Lee Rice

Mr. Rice is a Certified Specialist in Taxation with the State Bar of California and is also a Certified Elder Law...  |  Read More

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$197