- 6 - OPINION Respondent determined that the recording of the deed from Mr. Wells to petitioner caused her to be the sole owner of the property. As a result, respondent determined that petitioner should have reported the entire net realizable gain on the sale of the Paddock Lane property. Petitioner contends that the deed was invalid and of no effect because there was no specific intent to transmute the Paddock Lane property to separate property. As a consequence, petitioner argues, even though formal title vested in her, the Paddock Lane property was still community property.4 Thus, petitioner claims that she is not liable for the total amount of gain on the sale of the property. Petitioner bears the burden of proving that respondent's determination is erroneous. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Generally, sections 61 and 1001 require a taxpayer to recognize income in the year the gain is realized. The owner is the person responsible for reporting the gain on the sale of property. State law controls the nature of the legal interest of the taxpayer. Once ownership is decided under State law, Federal law 4 Under California law, joint tenancy property acquired during the marriage is presumed to be a community property asset, for purposes of division of such property in a marriage dissolution proceeding. Former Cal. Civ. Code sec. 4800.1(b) (West Supp. 1994), which was repealed and is now codified in Cal. Fam. Code sec. 2581 (West 1994).Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011