skip navigation

Search Help
Navigation Help

Tax Map Index
ABCDEFGHI
JKLMNOPQR
STUVWXYZ#

International
Tax Topic Index

Affordable Care Act
Tax Topic Index

Forms
Publications

Comments
About Tax Map

IRS.gov Website
Publication 555
taxmap/pubs/p555-004.htm#en_us_publink1000168815

End of the Community(p9)

rule
The marital community may end in several ways. When the marital community ends, the community assets (money and property) are divided between the spouses. Similarly, a registered domestic partnership may end in several ways and the community assets must be divided between the registered domestic partners.
taxmap/pubs/p555-004.htm#en_us_publink1000168816

Death of spouse.(p9)

rule
If you own community property and your spouse dies, the total fair market value (FMV) of the community property, including the part that belongs to you, generally becomes the basis of the entire property. For this rule to apply, at least half the value of the community property interest must be includible in your spouse's gross estate, whether or not the estate must file a return (this rule does not apply to registered domestic partners).
taxmap/pubs/p555-004.htm#en_us_publink10004351

Example.(p9)

Bob and Ann owned community property that had a basis of $80,000. When Bob died, his and Ann's community property had an FMV of $100,000. One-half of the FMV of their community interest was includible in Bob's estate. The basis of Ann's half of the property is $50,000 after Bob died (half of the $100,000 FMV). The basis of the other half to Bob's heirs is also $50,000.
For more information about the basis of assets, see Publication 551, Basis of Assets.
EIC
The above basis rule does not apply if your spouse died in 2010 and the spouse's executor elected out of the estate tax, in which case section 1022 will apply. See Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, for additional information.
taxmap/pubs/p555-004.htm#en_us_publink1000168817

Divorce or separation.(p9)

rule
If spouses divorce or separate, the (equal or unequal) division of community property in connection with the divorce or property settlement does not result in a gain or loss. For registered domestic partners, an unequal division of community property in a property settlement may result in a gain or loss. For information on the tax consequences of the division of property under a property settlement or divorce decree, see Publication 504.
Each spouse (or each registered domestic partner) is taxed on half the community income for the part of the year before the community ends. However, see Spouses living apart all year, earlier. Any income received after the community ends is separate income. This separate income is taxable only to the spouse (or the registered domestic partner) to whom it belongs.
An absolute decree of divorce or annulment ends the marital community in all community property states. A decree of annulment, even though it holds that no valid marriage ever existed, usually does not nullify community property rights arising during the "marriage." However, you should check your state law for exceptions.
A decree of legal separation or of separate maintenance may or may not end the marital community. The court issuing the decree may terminate the marital community and divide the property between the spouses.
A separation agreement may divide the community property between you and your spouse. It may provide that this property, along with future earnings and property acquired, will be separate property. This agreement may end the community.
In some states, the marital community ends when the spouses permanently separate, even if there is no formal agreement. Check your state law.
If you are a registered domestic partner, you should check your state law to determine when the community ends.