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Posted by tim on June 13, 2006, 10:48 pm
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When he died is irrelevant. The statute simply says the
$500,000 exclusion is available for a joint return, which is
available in the year of death. The Tax Court applies the
literal language of the Code, so the Service would have
absolutely no basis for countering the simple language of
=A7121(b)(2)(A).
In addition, simply living in a community property state may
not be enough to provide a dual stepped up basis. In
California, for example, title officers routinely draft
grant deeds for married couples as joint tenants, when the
form of holding should be community property with right of
survivorship (CPWROS). As a result, many widows and widowers
are not even eligible for a 100% step up in basis. The joint
tenancy creates a rebuttable presumption which is difficult
to overcome absent a clear showing of mutual intent that the
property be community in nature. (See Bordenave v. United
States, 150 F. Supp. 820-ND Cal 1957)
Tim
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