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Enrolled Agent: Individual Exam 2020 > Community Property States and Rules > Flashcards

Flashcards in Community Property States and Rules Deck (9)
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1
Q

How does living in a community property state affect a tax return?

A

Property acquired after marriage and income generated are allocated evenly between spouses
Exception: inherited property

2
Q

How does the Texas Rule affect INCOME GENERATED on property that was acquired before marriage or inherited?

A

The income is considered community income and must be divided between the spouses
*Texas, Louisiana, Idaho use this method

3
Q

How does the California Rule affect INCOME GENERATED on property that was acquired before marriage or inherited?

A

The income is considered separate and would go on the return of the property owner.
* CA,AZ, NV, NM, WA, WI

4
Q

What are the:

  1. Eight Community Property states
  2. State with the Marital Property Act
  3. State that allows taxpayers to opt-into community property rules
A
  1. Community Property States: CA, NV, AZ, NM, TX, LA, WA, ID
  2. Marital Property Act: WI
  3. Opt -in: Alaska
5
Q

For spouses that did not file MFJ and lived apart all year, how is Earned Income allocated?

A

Allocate to the spouse who earned it

6
Q

For spouses that did not file MFJ and lived apart all year, how is Self-employment income allocated?

A

Allocate to the person who carries on the business

7
Q

For spouses that did not file MFJ and lived apart all year: how is Joint trade/business income allocated?

A

Allocate income and deductions based on spouses distributive share of trade/business

8
Q

For spouses that did not file MFJ and lived apart all year, how is separate property income allocated?

A

Generally, income goes to the owner for the property (California Rule.
Exception: TX, LA, ID - Texas rule applies (divide between spouses)

9
Q

IRC Section 66

A

Community property rules for married spouses that lived apart. Generally the spouse that earns the income will keep it