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pursuant to a bank deposits analysis would require evidence of
deposits and an identification of which deposits should be
excluded from income. Business deductions are allowed or
disallowed based on whether they can be substantiated.
Generally, the only evidence necessary to establish that
income is community income is that the income was received by
either spouse during the marriage while domiciled in a community
property State. As we have recently stated:
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." 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.
The character of property as separate or community
is determined at the time of acquisition. Property
acquired by purchase after marriage is presumed to be
community property. Furthermore, earnings of a husband
acquired during marriage are presumed to be community
property. 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. Under California law, the
burden of proving that property is separate rests on
the party making such assertion. [Webb v.
Commissioner, T.C. Memo. 1996-550; citations omitted.]
On the other hand, whether respondent may apply section
66(b) and disregard community property law in determining
petitioner's income requires evidence of whether petitioner acted
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