APPLICATION OF FEDERAL INCOME, ESTATE AND GIFT TAX LAWS TO COMMUNITY PROPERTY

Authors

Willard S. Pedersen, Member of Washington Bar

Abstract

The ganancial or community concept of property ownership, by which husband and wife have equal, vested, undivided, one-half interests in property held by them as tenants in community, has been a thorn in the side of federal tax laws ever since some tax-conscious community income earner decided to report as taxable only one-half of the community income, leaving the other half to be reported by and taxed to his wife upon her separate return. Such procedure first became authorized in community property jurisdictions recognizing the wife's interest as "vested" in 1920. Not long thereafter the realization began to dawn upon "outsiders" that residents of community property jurisdictions were enjoying distinct tax advantages not available to them, and from that moment to the present day, criticism of the tax effect of community property laws has been frequent. That the tax laws have operated favorably upon earners of community income is an indictment of the federal tax statutes rather than of the community property laws. This is especially evident when it is realized that in all jurisdictions except two, community property laws were in force long before the Sixteenth Amendment to the United States Constitution was adopted.

Recommended Citation

Willard S. Pedersen, APPLICATION OF FEDERAL INCOME, ESTATE AND GIFT TAX LAWS TO COMMUNITY PROPERTY, 45 Mich. L. Rev. 409 (1947).
Available at: https://repository.law.umich.edu/mlr/vol45/iss4/3