In a community property state, when the surviving spouse's IRA was purchased with community funds, then does half of the *surviving spouse's* IRA get added to the gross estate of the deceased non-participant spouse?
If so, how is that reconciled with 408(g) while appears to be absolute about community propoerty laws not applying to IRAs?
Thanks
Rick,
I think (you will want to verify) that the answer is that state law dictates what property interests an individual owns and then federal tax law applies a tax on that property. Thus, in most community property states, each spouse will own 1/2 of the community property. Then the gross estate, for federal tax purposes, consists of those property interests. I do beleive that there were several Supreme Court cases on point....
Kreig Mitchell
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