IRS’s New Property Taxation Rules Help Wealthy Californian Gays (And Nobody Else)

Yes, we should all be pleased to learn the IRS, a federal authority, is recognizing domestic partnership relationships in California when it comes to taxing joint community property. Does this help the gays? Yes, especially if one partner earns significantly more than the other, because now the joint income is halved, with each partner listing fifty percent of the earnings on his return. But don’t think this means you can file taxes jointly; you cannot, with that DOMA thing hanging around. And also: Congratulations if you are a gay couple wealthy enough to own property and happen to file taxes in California! For the rest of us, who could benefit from some other taxation changes, this means nothing. Oh, and then there’s this:

In another chief counsel advice, the IRS said it would consider the assets of a California taxpayer’s registered domestic partner when determining the “reasonable collection potential of a taxpayer’s Offer In Compromise.” That could make it harder for one partner who is trying to settle a federal tax debt to pay less than the full amount because the IRS, when determining his or her ability to pay, would look at the other partner’s resources.

Sometimes you win, sometimes you lose.

[SF Chronicle]