The federal gift and estate tax consequences of transfers of community property



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Eight states, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas and Washington, have a community property system of law. Under this system, all property acquired during marriage is owned in equal, vested shares by husband and wife. The other forty-two states operate under the common law system which provides that property is owned on an individual basis, regardless of marital status. The federal tax laws applying to all United States citizens and residents have basically been designed from the perspective of this latter system. Therefore, the interaction between the federal tax law and community property law may produce tax consequences which are inconsistent with the original purpose and intent of Congress. The purpose of the dissertation is to provide a detailed analysis of the relationship of the community property law system to the federal estate and gift tax statutes. The paper will focus on the various problem areas in which the tax consequences of the interaction of the two systems are inequitable, unreasonable or theoretically unsound. Recommendations for specific tax reform legislation in these areas will then be developed. Because this dissertation is an exercise in legal research, original source material will consist of federal and state statutory law, federal and state judicial decisions, and Treasury regulations and rulings interpreting the correct application of federal tax law.



Inheritance and transfer tax--Law and legislation--United States., Gifts--Taxation--Law and legislation--United States.