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California is a community property State. Therefore, we
look to California law to determine whether income is community
property, or whether it is separate property. United States v.
Mitchell, supra; Lucia v. Commissioner, T.C. Memo. 1991-77, affd.
without published opinion 962 F.2d 14 (9th Cir. 1992). The term
"community property", pursuant to California law, is generally
defined as "property acquired by husband and wife, or either,
during marriage, when not acquired as the separate property of
either." Cal. Civ. Code sec. 687. (West 1982); Lucia v.
Commissioner, supra. Under California law, absent a contrary
agreement, each spouse has the right to one half of all community
income from the moment it is acquired and therefore is liable for
the Federal income tax on one half of such amount. Cal. Civ.
Code sec. 5105. (West 1983); United States v. Malcolm, 282 U.S.
792 (1931).
The character of property as separate or community is
determined at the time of acquisition. See v. See, 64 Cal. 2d
778, 783-784 (1966). Property acquired by purchase after
marriage is presumed to be community property. Id. Furthermore,
earnings of a husband acquired during marriage are presumed to be
community property. People v. Lockett, 25 Cal. App. 3d 433, 439
(1972). With respect to unearned income, where the source
property is presumed to be community property, and no evidence is
introduced to rebut such presumption, then the income from such
property is presumed community income. Estate of Frye v.
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