CCH Tax News Headlines - August 25, 2010

Won't happen unless DOMA is found to be invalid.

CCH Tax News Headlines - August 25, 2010 Federal Headlines: ... State Headlines:

8/25/2010 - _California --Personal Income Tax: IRS Asked to Recognize Community Property Laws for Same-Sex Married Couples_

The IRS sometimes suprises us.

See for example: Chief Counsel Advice (CCA) No. 201021050 dated May 5, 2010.

California registered domestic partners must each report one-half of the community income, including earned income, on their federal income tax return.

This has nothing to do with DOMA because it has nothing to do with gay marriage. It's about domestic partnership, and DOMA has nothing to say about that.

It's much more minor than anything related to DOMA. Did folks actually read the link from the CCH headlines posting?

California has both:

• RDP's (who, starting with tax year 2007, were required to file with married status(*) on their state return in California)

• SSMC (same-sex married couples), those with legally (at the state level) valid marriages from the time of the initial court ruling that started all of this, and the passage of Prop 8 (same-sex couple marriages performed in CA after 5pm on June 16, 2008, and before Nov. 5,

2008, are valid marriages for CA purposes).

According to Spidell, the issue stated in the CCH brief (the OP of this thread) has to do with applying the new IRS position to SSMC as well as RDP, simply for consistency's sake.

I believe there is also a critical difference between a revenue ruling (which there currently is none) and a CCA (chief counsel advisory) (which is all there is at this point). Basically, they want the IRS to take a serious position, and apply it equally to both categories of taxpayers in CA who are required to file married for state but prohibited from doing so for federal.

"[...] the California Legislature passed a resolution (AJR 29) on August

9, 2010, asking the IRS to issue a revenue ruling that says that same-sex married couples should be treated the same as RDPs for federal purposes, too. The request is in response to CCA 201021050, which states that RDPs in California must now combine their income and each report half of it on his or her federal tax return, but does not address same-sex married couples." [Spidell Publishing Co.]

-Mark Bole

(*) or married, but considered unmarried for tax purposes, i.e. HOH when there are dependents involved, and the partners lived apart last six months of the year.

I disagree, because it says MARRIED, not RDPs, so it's talking about California's "Prop. 8", not the RDP statutes which California has had for several years now.

It IS talking about same-sex marriages, which DOMA specifically does not recognize.

Call me naive, but it's possible the IRS specifically chose not to address SSMC and community property, only RDP and community property. How one can have a marital community without a marriage is another matter.

As a practical matter, suppose one wants to take a position different from CCA 201021050 (the advisory on how to treat income for RDP's) on the 2010 tax return, how do you do it? Is form 8275 required? Form

8275-R? Or do you simply skip that step, file the return as previously, and move on?

-Mark Bole

I find that disclosure is better than not to avoid any penalty. However,

8275 (and -R) is meant for positions that disagree with court cases/statutes and regulations respectively. Therefore, a simple statement is the most that should be required. However, a statement when not required could bring undue attention.

I practice in California. We have a window where some same-sex "marriages" were performed, which "prop. 8" won't overturn (non-retroactivity). It's my understanding that those people should file joint federal returns, ignoring DOMA, because marriage is a state issue. However, I have no clients affected by this.