DOMA vs. Same Sex Marriage + Community Property State

Christopher Green wrote:

- quote -

> California's unusual (and highly advantageous) "community
> property with right of survivorship" (CPWROS) form of
> holding title does require the parties to be married (and,
> at least until the dust settles, "Adam and Steve" still
> can't marry in California), so a same-sex couple still
> cannot take title as CPWROS.

While Civil Code Section 682.1 by its terms says that CPWROS
is for husbands and wives, the new statutes coming into
effect on January 1 establish that domestic partners have
[almost] all rights of spouses. Since this type of ownership
is not excluded by the new statutes, it will be allowed to
domestic partners.

Stu

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"MTW" <mtwingcpa[at]yahoo.com> wrote:
- quote -

> Christopher Green wrote:

> > Other joint tenancies aren't,
> > so the status of the parties' marriage would make a
> > difference even when there's a joint tenancy.

> I fully agree that ~whether~ a couple is deemed "married"
> will make a difference for both estate and income tax
> purposes. However, owning property as "joint tenants" does
> not, in and of itself, imply that the owners are married (or
> not married) to each other. However, ownership as "community
> property" most definitely implies that they ARE (except, I
> guess, in California).

I think we're in agreement, just not sure what the other is
stating.

A husband-and-wife joint tenancy (that is, a joint tenancy
in which the parties are married to each other in the eyes
of the IRS) is different from other joint tenancies. Sure,
you can have a joint tenancy without being married. But the
character of the joint tenancy still depends on whether you
are married or not.

California's unusual (and highly advantageous) "community
property with right of survivorship" (CPWROS) form of
holding title does require the parties to be married (and,
at least until the dust settles, "Adam and Steve" still
can't marry in California), so a same-sex couple still
cannot take title as CPWROS.

California quasi-community property is a horse of a different color...

--
Not a lawyer,

Chris Green

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Dick Adams wrote:

- quote -

> If I were a betting man (which I am), I would go read the
> Colorado/Romer decision (someone else please find the cite)
> to see who stood where in that case, then I would set a
> line. Until then I'd call a Homosexual Marriage line of
> (YES = 140/100 and (NO = 150/100) to be fair.

ROMER v. EVANS, 517 U.S. 620 (1996)

Here is the official court reader's digest version:

After various Colorado municipalities passed ordinances
banning discrimination based on sexual orientation in
housing, employment, education, public accommodations,
health and welfare services, and other transactions and
activities, Colorado voters adopted by statewide referendum
"Amendment 2" to the State Constitution, which precludes all
legislative, executive, or judicial action at any level of
state or local government designed to protect the status of
persons based on their "homosexual, lesbian or bisexual
orientation, conduct, practices or relationships."
Respondents, who include aggrieved homosexuals and
municipalities, commenced this litigation in state court
against petitioner state parties to declare Amendment 2
invalid and enjoin its enforcement. The trial court's grant
of a preliminary injunction was sustained by the Colorado
Supreme Court, which held that Amendment 2 was subject to
strict scrutiny under the Equal Protection Clause of the
Fourteenth Amendment because it infringed the fundamental
right of gays and lesbians to participate in the political
process. On remand, the trial court found that the
amendment failed to satisfy strict scrutiny. It enjoined
Amendment 2's enforcement, and the State Supreme Court
affirmed.

Held: Amendment 2 violates the Equal Protection Clause.

(a) The State's principal argument that Amendment 2 puts
gays and lesbians in the same position as all other persons
by denying them special rights is rejected as implausible.
The extent of the change in legal status effected by this
law is evident from the authoritative construction of
Colorado's Supreme Court — which establishes that the
amendment's immediate effect is to repeal all existing
statutes, regulations, ordinances, and policies of state and
local entities barring discrimination based on sexual
orientation, and that its ultimate effect is to prohibit any
governmental entity from adopting similar, or more
protective, measures in the future absent state
constitutional amendment — and from a review of the terms,
structure, and operation of the ordinances that would be
repealed and prohibited by Amendment 2. Even if, as the
State contends, homosexuals can find protection in laws and
policies of general application, Amendment 2 goes well
beyond merely depriving them of special rights. It imposes
a broad disability upon those persons alone, forbidding
them, but no others, to seek specific legal protection from
injuries caused by discrimination in a wide range of public
and private transactions.

(b) In order to reconcile the Fourteenth Amendment's promise
that no person shall be denied equal protection with the
practical reality that most legislation classifies for one
purpose or another, the Court has stated that it will uphold
a law that neither burdens a fundamental right nor targets a
suspect class so long as the legislative classification
bears a rational relation to some independent and legitimate
legislative end. See, e.g., Heller v. Doe, 509 U.S. 312,
319-320. Amendment 2 fails, indeed defies, even this
conventional inquiry. First, the amendment is at once too
narrow and too broad, identifying persons by a single trait
and then denying them the possibility of protection across
the board. This disqualification of a class of persons from
the right to obtain specific protection from the law is
unprecedented and is itself a denial of equal protection in
the most literal sense. Second, the sheer breadth of
Amendment 2, which makes a general announcement that gays
and lesbians shall not have any particular protections from
the law, is so far removed from the reasons offered for it,
i.e., respect for other citizens' freedom of association,
particularly landlords or employers who have personal or
religious objections to homosexuality, and the State's
interest in conserving resources to fight discrimination
against other groups, that the amendment cannot be explained
by reference to those reasons; the amendment raises the
inevitable inference that it is born of animosity toward the
class that it affects. Amendment 2 cannot be said to be
directed to an identifiable legitimate purpose or discrete
objective. It is a status-based classification of persons
undertaken for its own sake, something the Equal Protection
Clause does not permit.

- quote -

> All I have to do is setup a handbook (for less corrupt
> readers, that's a gambling operation) in a place where
> it is legal and make certain I pay my taxes properly.

Just don't try that over the internet! ;-)

Stu

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Stuart Bronstein wrote:

- quote -

> But it specifically contemplates that they are not
> married. Because in addition to gays, it allows heterosexual
> couples over 62 to become domestic partners so that (probably
> for social security purposes) are not married under federal
> law.

Interesting! I wasn't aware of that latter point, but it
would quite likely cast a different shadow on the problem
I've been discussing.

FWIW, I had an elderly women as a client. She and her
current gentleman friend held a "commitment ceremony,"
cleverly designed NOT to be a marriage so that she would not
lose the government insurance/annuity benefits resulting
from the death of her first husband in WWII. I believe she
was also collecting spousal social security benefits based
on the account of her second husband (divorced many years
ago). Both of those benefits would have vanished had she
officially remarried.

MTW

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Christopher Green wrote:

- quote -

> Other joint tenancies aren't,
> so the status of the parties' marriage would make a
> difference even when there's a joint tenancy.

I fully agree that ~whether~ a couple is deemed "married"
will make a difference for both estate and income tax
purposes. However, owning property as "joint tenants" does
not, in and of itself, imply that the owners are married (or
not married) to each other. However, ownership as "community
property" most definitely implies that they ARE (except, I
guess, in California).

MTW

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As someone whose only interest in the matter is to read the
words Willie and the Supremes bring down from on-high to
share with us.

If I were a betting man (which I am), I would go read the
Colorado/Romer decision (someone else please find the cite)
to see who stood where in that case, then I would set a
line. Until then I'd call a Homosexual Marriage line of
(YES = 140/100 and (NO = 150/100) to be fair.

All I have to do is setup a handbook (for less corrupt
readers, that's a gambling operation) in a place where
it is legal and make certain I pay my taxes properly.

Dick

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Arthur L. Rubin wrote:
- quote -

> Stuart Bronstein wrote:
> > Ed Zollars, CPA wrote:

> > No, I think he's referring to section 1014(b)(6), which says
> > in full,
> > > "In the case of decedents dying after December 31, 1947,
> > property which represents the surviving spouse's ...

> STOP. If the DOMA is "legal", then there's no
> surviving "spouse" in the instant hypothetical.

If you're talking about ownership by domestic partners,
you're right. The issue, though, was whether federal law
ever treats state created property rights differently from
other state created rights. Clearly it does.

Stu

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D. Stussy wrote:
- quote -

> Ed Zollars, CPA wrote:

> > ...
> > As well, as I recall the start of this thread the issue was
> > California granting community property treatment to domestic
> > partners, specifically *NOT* claiming those partners are now
> > married under the law. In that case, I would say that even
> > if DOMA were found unconstitutional, it wouldn't impact this
> > issue since they aren't spouses under state law.

> Being in CA, I would say, " ...since they aren't [CURRENTLY]
> spouses under state law." Let's see what the appeals do....

The new California domestic partnership law creates essentially
identical rights for gay couples that exist for married couples.
But it specifically contemplates that they are not married.
Because in addition to gays, it allows heterosexual couples over
62 to become domestic partners so that (probably for social
security purposes) are not married under federal law.

Stu

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Ed Zollars, CPA wrote:

- quote -

> ...
> As well, as I recall the start of this thread the issue was
> California granting community property treatment to domestic
> partners, specifically *NOT* claiming those partners are now
> married under the law. In that case, I would say that even
> if DOMA were found unconstitutional, it wouldn't impact this
> issue since they aren't spouses under state law.

Being in CA, I would say, " ...since they aren't [CURRENTLY]
spouses under state law." Let's see what the appeals do....

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MTW wrote:
- quote -

> D. Stussy wrote:

> > Interesting thought, but if this were allowed to be
> > disregarded, then would there be an impact on other types of
> > multiple-owner relationships? If the IRS could disregard CP
> > because there's no federally recognized marriage, then can
> > they disregard other things such as joint-tenancy (or
> > JTWOS)?

> My view would be that "joint tenancy" and "tenancy in
> common" are in no way exclusive to marriage, and therefore
> not subject to the potential problem I've raised. On the
> other hand, "community property" and "tenancy by the
> entirety" are forms of ownership that have heretofore been
> EXCLUSIVELY defined as forms of "marital" property. So, it
> is within that realm where I see the problem surfacing.
> (Disclaimer: I'm not that familiar with the tax
> ramifications, if any, of "tenancy by the entirety.")

I agree that some of those forms of ownership are "marriage
based," but my point was that this could lead to the IRS
disregarding ANY type of ownership under the federal
preemption doctrine should it be allowed to ignore
"community property" issues for those it deems not married
under DOMA (even if they are married at the state level).

[Maybe my warning "throws out too much bath water with the
baby."]

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"MTW" <mtwingcpa[at]yahoo.com> wrote:
- quote -

> D. Stussy wrote:

> > Interesting thought, but if this were allowed to be
> > disregarded, then would there be an impact on other types of
> > multiple-owner relationships? If the IRS could disregard CP
> > because there's no federally recognized marriage, then can
> > they disregard other things such as joint-tenancy (or
> > JTWOS)?

> My view would be that "joint tenancy" and "tenancy in
> common" are in no way exclusive to marriage, and therefore
> not subject to the potential problem I've raised. On the
> other hand, "community property" and "tenancy by the
> entirety" are forms of ownership that have heretofore been
> EXCLUSIVELY defined as forms of "marital" property. So, it
> is within that realm where I see the problem surfacing.
> (Disclaimer: I'm not that familiar with the tax
> ramifications, if any, of "tenancy by the entirety.")

I believe a tenancy by the entirety (in the states that have
it) has the same estate-tax and step-up consequences as a
husband-and-wife joint tenancy. Both of these are "qualified
joint interests" (Pub. 555). Other joint tenancies aren't,
so the status of the parties' marriage would make a
difference even when there's a joint tenancy.

A husband-and-wife joint tenancy is a qualified joint
interest, 50/50 ownership is presumed, and the 50% step-up
obtains. Other joint tenancies are not qualified joint
interests, and ownership is proportional to consideration
furnished, so these need not be 50/50: the decedent's share,
which may be more or less than that, is in the gross estate
and gets the step-up.

--
Chris Green

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Stuart Bronstein wrote:
- quote -

> Ed Zollars, CPA wrote:

> No, I think he's referring to section 1014(b)(6), which says
> in full,
> "In the case of decedents dying after December 31, 1947,
> property which represents the surviving spouse's ...

STOP. If the DOMA is "legal", then there's no
surviving "spouse" in the instant hypothetical.

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D. Stussy wrote:

- quote -

> Interesting thought, but if this were allowed to be
> disregarded, then would there be an impact on other types of
> multiple-owner relationships? If the IRS could disregard CP
> because there's no federally recognized marriage, then can
> they disregard other things such as joint-tenancy (or
> JTWOS)?

My view would be that "joint tenancy" and "tenancy in
common" are in no way exclusive to marriage, and therefore
not subject to the potential problem I've raised. On the
other hand, "community property" and "tenancy by the
entirety" are forms of ownership that have heretofore been
EXCLUSIVELY defined as forms of "marital" property. So, it
is within that realm where I see the problem surfacing.
(Disclaimer: I'm not that familiar with the tax
ramifications, if any, of "tenancy by the entirety.")

MTW

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Stuart Bronstein wrote:

- quote -

> This is a specific federal tax law that provides different
> treatment for community property than for separate property.

I've lost the context of this thread some--I agree that for
that section, DOMA would apply, since the person could not
be a "spouse" for federal law purposes under DOMA if the
issue was same-sex marriage. But that's because that
section provides for a two pronged test--the property must
be community (it is that) and it must pass to a spouse (it
doesn't do that).

As well, as I recall the start of this thread the issue was
California granting community property treatment to domestic
partners, specifically *NOT* claiming those partners are now
married under the law. In that case, I would say that even
if DOMA were found unconstitutional, it wouldn't impact this
issue since they aren't spouses under state law.

--
Ed Zollars, CPA
Phoenix, Arizona

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Stuart Bronstein wrote:

- quote -

> On the other hand, section 1014(b)(6) requires the person
> inheriting community property to be a "spouse," meaning that
> the result you invision is the most likely under the state
> of the law as it stands now.

And, frankly, I would expect that provision (basis step-up
upon death of first partner) to become a far more
controversial and litigated issue under the DOMA than the
question of earned income allocations. But, who knows... <g
MTW

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Ed Zollars, CPA wrote:

- quote -

> The problem is that Congress *didn't* enact community property
> provisions in the IRC--rather, they kept silent on the matter
> of property law in general, instead simply adopting state law
> in this area indirectly.

I was thinking of IRC 66. It was clearly enacted by
Congress, and it clearly contains definitions of "community
income" and "community property" at IRC 66(d)(2) & (3). Now,
that said, we could have an endless debate over whether IRC
66 is a "glass of water half full or half empty" provision,
but we certainly can't disagree over the fact that Congress
enacted it. (Or can we... <g> )

- quote -

> Now they clearly could do the same thing in the
> community property arena, but it would seem to take an
> extremely activist jurist to expand DOMA to get at community
> property in this case.

Well, first, permit me to note that "activist" judges on the
right are known as "strict constructionists." "Activism,"
apparently, only happens on the left. <g
But, more to the "bleeding edge" of this debate, note that
the Republican platform apparently contains a provision
opposing ANY legal recognition of same-sex relationships,
whether called "marriage" or not. Therefore, I think the
party in power has clearly telegraphed to their appointees
on the bench just what they expect.

The other day, for the first time in 35 years, I actually
thought about moving to Canada. If I could just drop my
middle initial "P" I'd be all set!

MTW

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Ed Zollars, CPA wrote:
- quote -

> MTW wrote:

> > I can just hear a right-leaning federal judge say, "When
> > Congress enacted the community property provisions set forth
> > in the IRC...

> The problem is that Congress *didn't* enact community property
> provisions in the IRC--rather, they kept silent on the matter of
> property law in general, instead simply adopting state law in this
> area indirectly. The only provisions in there are ones to
> *override* the rule in very specific cases--and domestic
> partnerships isn't one of them <grin> .

No, I think he's referring to section 1014(b)(6), which says
in full,

"In the case of decedents dying after December 31, 1947,
property which represents the surviving spouse's one-half
share of community property held by the decedent and the
surviving spouse under the community property laws of any
State, or possession of the United States or any foreign
country, if at least one-half of the whole of the community
interest in such property was includible in determining the
value of the decedent's gross estate under chapter 11 of
subtitle B (section 2001 and following, relating to estate
tax) or section 811 of the Internal Revenue Code of
1939;..."

This is a specific federal tax law that provides different
treatment for community property than for separate property.

Stu

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MTW wrote:
- quote -

> Ed Zollars, CPA wrote:

> > That authority should still apply--the issue is that
> > property law determines the "ownership" of the income, and
> > community property law at the state level impacts the
> > "ownership" of that income.

> My conceptual problem with this is that the "community
> property" flows from a relationship (never mind whether it
> is CALLED a "marriage" or not) that the DOMA requires
> federal agencies to ignore. So, unless or until the DOMA is
> struck down, I think the IRS can freely ignore the CP
> aspects of this income.
> I can just hear a right-leaning federal judge say, "When
> Congress enacted the community property provisions set forth
> in the IRC, they did so with the TRADITIONAL definition of
> community property in mind - the definition that has
> survived for ~hundreds~ [I guess] of years - namely, that
> this is a form of ownership between a HUSBAND and a WIFE.
> The great sovereign state of California has chosen to expand
> this definition to new and untested territory. That may be
> their right as a state. However, in the meantime, it is the
> obligation of the IRS to follow the DOMA." Or something like
> that... <g> Keep in mind, I don't AGREE with this interpretation; I
> simply believe it is likely.

Interesting thought, but if this were allowed to be
disregarded, then would there be an impact on other types of
multiple-owner relationships? If the IRS could disregard CP
because there's no federally recognized marriage, then can
they disregard other things such as joint-tenancy (or
JTWOS)?

That interpretation that you don't necessarily agree with
can be further corrupted....

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MTW wrote:

- quote -

> I can just hear a right-leaning federal judge say, "When
> Congress enacted the community property provisions set forth
> in the IRC...

The problem is that Congress *didn't* enact community property
provisions in the IRC--rather, they kept silent on the matter of
property law in general, instead simply adopting state law in this
area indirectly. The only provisions in there are ones to
*override* the rule in very specific cases--and domestic
partnerships isn't one of them <grin> .

Note that Congress also used state law definitions for "married" but
then specifically limited that use of the term in the DOMA. Now
they clearly could do the same thing in the community property
arena, but it would seem to take an extremely activist jurist to
expand DOMA to get at community property in this case. And I'm not
sure the Supreme Court really tends to lean in the activist
direction--and while the Ninth may from time to time, most often
that leaning is left and not right <grin> .

--
Ed Zollars, CPA
Phoenix, Arizona

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MTW wrote:

- quote -

> I can just hear a right-leaning federal judge say, "When
> Congress enacted the community property provisions set forth
> in the IRC, they did so with the TRADITIONAL definition of
> community property in mind - the definition that has
> survived for ~hundreds~ [I guess] of years - namely, that
> this is a form of ownership between a HUSBAND and a WIFE.
> The great sovereign state of California has chosen to expand
> this definition to new and untested territory. That may be
> their right as a state. However, in the meantime, it is the
> obligation of the IRS to follow the DOMA." Or something like
> that... <g
Interesting. As far as I recall the DOMA doesn't deal with

non-marital relationships at all. So the argument would be
that it can't affect the creation of community property for
a non-marital relationship.

On the other hand, section 1014(b)(6) requires the person
inheriting community property to be a "spouse," meaning that
the result you invision is the most likely under the state
of the law as it stands now.

Stu

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