CA cap.gains

[Gretel]

Does CA tax cap.gains at normal tax rates or do they have special tax rates for cap.gains?

[S T]

Calif

Calif does not recognize capital gain treatment, taxed as ordinary income and appropriate tax rate.

Sandy

[Gretel]

Thank you so much, Sandy. One more CA questions, please. The house sold, once belonged to taxpayer and spouse. Spouse died some years ago. Does T/P get step up in basis? I don't have any experience with community property states.

[RLymanC]

Stepped up Basis

Even thought CA is a community property state, if title to the house was in Joint Tennancy the surviving spouse gets one half stepped up basis.

If there was a document signed by both stating that the property is to be considered community property, or title was "Community Property with right of survivorship" then the full stepped up basis would pass to the surviving spouse.

[S T]

RLyman C is correct

But just to provide you with a little more info.

Calif is a community property state. If property is held in Joint Tenancy, the presumption is not Community Property, so only the one half receives step up basis. However, it can be declared in California that if there is an outside signed agreement/acknowledgement , that the h/w are holding property in joint tenancy that there intention the property was to be held as community asset regardless of title, it would receive the full step up basis.

There is some controversy on this handling, so I am just going to give you some links if you want further research

http://www.findarticles.com/p/articles/mi_m0ICC/is_10_71/ai_103088818

http://www.californiataxattorneyblog.com/2007/03/how_do_i_take_title_to_propert_1.html

Sandy

[Gretel]

Thank you so much, Sandy. It's very interesting. Happy Easter.

Gabriele