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Internal Revenue Manual
Part 25 - Special Topics
Chapter 25.18 - Community Property
25.18.1 - Basic Principles of Community Property Law
Last Revised:02-15-2005
25.18.1.2 - Determining if Community Property Laws Apply
25.18.1.2.1 - Domicile (02-15-2005)
(1) For federal tax purposes, a taxpayer's rights and interest in property
are determined under the laws of the taxpayer's state of domicile. United
States v. Mitchell, 403 U.S. 190 (1971); Morgan v. Commissioner, 309 U.S. 78
(1940). The examiner must determine domicile at the time that property or
the right to property was acquired. Since a taxpayer's domicile may change
over the period being examined, it may be necessary to allocate property and
determine tax consequences under the laws of more than one state. A similar
situation can arise with regard to the collection of federal tax. A revenue
officer must determine domicile at the time that property subject to
collection was acquired.
(2) The words "residence" and "domicile" do not necessarily mean the same
thing for legal purposes. A person may have several places of residence, but
only one domicile. A temporary place of abode may be a residence, but
domicile is based on where the taxpayer intends his or her permanent home to
be located. In general, the taxpayer's residence may be treated as his or
her domicile unless the taxpayer asserts otherwise, or this is contrary to
other facts in the case. Where a question regarding domicile arises,
objective facts reflecting the taxpayer's intention to maintain a permanent
home should be examined, including, but not limited to:
Whether taxpayer is on temporary work detail, attending school or
stationed in the military
Place of employment
Location of personal residence(s)
Location of family
Where vehicles are registered
Where taxpayer is registered to vote
Whether taxpayer files a state tax return
Other facts reflecting the taxpayer's involvement and ties to the
community
(3) Once domicile is established, it is presumed to continue unless it is
proven to have changed. Whitmore v. Commissioner, 25 T.C. 293 (1955); Myers
v. Commissioner, 11 T.C. 447 (1948), acq.,1949-2 C.B. 3. Therefore, if,
after weighing the facts and evidence, doubt remains regarding the correct
domicile, the domicile of origin prevails. Whitmore v. Commissioner, 25 T.C.
293 (1955), acq., 1956-2 C.B. 9; Webb v. Commissioner, T.C. Memo. 1996- 550.
(4) Occasionally, spouses reside in different states. Under traditional
community property laws, the marital community, consisting of both spouses,
could only have one place of domicile, which was determined by the domicile
of the husband. Today the domicile of the marital community should be
determined by the state with the most significant relationship to the
spouses and to their earnings. Lane-Burslem v. Commissioner, 659 F.2d 209
(D.C. Cir. 1981).
(5) Some state laws recognize that spouses can have different domiciles. For
example, Wisconsin does not subject either spouse to community property
unless both domicile in that state. Wis. Stat. 766.01(5). Louisiana also
recognizes that spouses may have different domiciles and will only subject
property acquired by the spouse domiciled in Louisiana to its community
property laws. See Lane-Burslem v. Commissioner, 659 F.2d 209 (D.C. Cir.
1981); See also Layman v. Commissioner, T.C. Memo. 1999-218 (reaching a
similar result under Arizona law); Commissioner v. Cavanaugh, 125 F.2d 366
(9th Cir. 1942) (reaching a similar result under California law).
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