Community Property

Community Property

Community Property means:
property acquired by a couple during marriage and recognized as of 1993 in nine states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin), whereby the law presumes the property to be the product of the joint efforts of both spouses. Income from community property, salaries, wages, and other compensation is considered to be earned one-half by each spouse. Thus, in a divorce, the couple's total property is divided in half unless a negotiated settlement is reached, even if most of the assets were earned by one member of the couple. Former IRC (check if this IRC provision is current here) §§879 and 10l4(b)(6)-(7).

The U.S. Internal Revenue Service can deny the benefits of community property to a spouse who treats income as his or her alone and fails to inform the other spouse of the nature and source of the income.

Example of Community Property:

Learn more about tax examples, explanations and calculations here.

Mary and Jim, who live in Idaho, are getting divorced. During their marriage Mary inherited $100,000, which is kept in a separate bank account. All other property was acquired during the marriage. Although Mary never worked outside the home, half of all property acquired by joint effort during the marriage is hers under the community property laws of the state. Her $100,000, however, is entirely her separate property.


Posted

in

by

Tags:

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *