This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell this Friday, February 22 is with Professor Patricia Cain of Santa Clara University Law School. Our interview subject is “Estate and gift tax problems of same sex couples.” The interview will be broadcast at 8:00 p.m. Pacific Time on CreaTV, Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org.

This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell this Friday, February 15 is with Professor Patricia Cain of Santa Clara University Law School. Our interview subject is “Federal tax developments for same sex couples.” The interview will be broadcast at 8:00 p.m. Pacific Time on CreaTV, Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org.

This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell this Friday, February 24 is with Professor Patricia Cain of Santa Clara University School of Law. Our interview subject is, “Estate and gift tax problems of same sex couples”. The interview will be broadcast at 8:00 p.m. Pacific Time on CreaTV, Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org.

This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell this Friday, February 17 is with Professor Patricia Cain of Santa Clara University School of Law. Our interview subject is, “Income tax problems of same sex couples”. The interview will be broadcast at 8:00 p.m. Pacific Time on CreaTV, Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org.

This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell this Wednesday, March 23, is with Professor Patricia Cain of Santa Clara University School of Law. Our interview subject is, “Estate and gift tax problems for same sex couples in Community Property states”. The interview will be broadcast at 7:00 p.m. Pacific Time on Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org.

This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell this Wednesday, March 16, is with Professor Patricia Cain of Santa Clara University School of Law. Our interview subject is, “Income tax problems for same sex couples in Community Property states”. The interview will be broadcast at 7:00 p.m. Pacific Time on Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org.

Remember you can find past episodes at www.financialinsiderweekly.com under “past episodes”.

This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell this Wednesday, August 11, is with Professor Patricia Cain of the Santa Clara University School of Law. We discuss recent federal tax developments for California registered domestic partners. The interview will be broadcast at 4:30 p.m. Pacific Time on Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org.

Remember you can find past episodes of Financial Insider Weekly at www.financialinsiderweekly.com.

The Internal Revenue Service has issued Private Letter Ruling 201021048 with guidance for California registered domestic partners (RDPs).

According to the ruling, California community property laws for RDPs were conformed to be the same as for married couples, effective January 1, 2007.

Therefore, although RDPs can’t file joint federal income tax returns,

1 – Wages and other earned income earned after the partners become RDPs should be divided in half and reported on each partner’s federal income tax return (unless there was an agreement between the partners before earning the income that it would not be community property).

2 – Withholding with respect to community property earned income should be divided in half and reported on each partner’s federal income tax return.

3 – Since the earnings are community property, each partner has a vested interest in his or her share, and there is no transfer or gift from one partner to the other of their vested share for federal gift tax purposes.

Most Califonria tax advisors believed these were the correct conclusions before the IRS issued this ruling, but it is a relief to see more clear guidance. Previous guidance in Chief Counsel Advice 200608038 did not support this position, but the Chief Counsel’s office has issued new advice 201021050, retroactively effective to January 1, 2007, that does support the new position. See blog post http://michaelgraycpa.com/2010/06/11/irs-says-california-rdps-should-split-wages-on-tax-returns/.

The IRS Chief Counsel’s Office has issued updated guidance, Chief Counsel Advice (CCA) 201021050, for reporting earned income of California registered domestic partners (RDPs).

According to the ruling, the federal government recognizes community property rights of California registered domestic partners effective January 1, 2007. Therefore, one-half of the earned income of a partner should be reported on each partner’s federal income tax return, unless the RDPs execute an agreement opting out of community property treatment.

Registered domestic partners still can’t file joint federal income tax returns.

This new reporting requirement should be followed for income tax returns filed after the ruling was issued on May 5, 2010. Taxpayers may optionally amend income tax returns filed for tax years 2007 through 2009 to follow the new ruling.

This ruling changes previous advice issued in CCA 200608038 on February 24, 2006. In the earlier ruling, the IRS said each RDP should report his or her own earned income, disregarding community property rights. The reason is on September 26, 2006, California enacted Senate Bill 1827, which repealed language in the California Domestic Partner Rights and Responsibilities Act of 2003 that said “earned income may not be treated as community property for state income tax purposes.”

This is a tremendous validation of community property rights for California same sex couples and other registered domestic partners, and could result in significant tax savings for some of them. On the other hand, the ruling adds an element of complexity for tax return preparers and the IRS because income reported on an information return, such as a Form W-2, under one person’s social security number will be reported on two income tax returns.