Leslie O. Dawson (Glenn & Dawson, Walnut Creek, CA) & Andrew M. Mintzer (Freeman & Mills, Los Angeles, CA) of the California Society of Certified Public Accountants have sent a letter (also available on the Tax Analysts web site as Doc 2006-268, 2006 TNT 4-42) to the Treasury Department requesting guidance to resolve conflicts between state community property laws and federal tax laws that have emerged following the passage of the state’s Domestic Partner Act:

As 2005 comes to a close, one issue for registered domestic partners and their CPAs is determining how to report the earned income of domestic partners on each partner’s federal tax return. One alternative is that each partner report half of both partners’ earned income under California community property law (see Poe v. Seaborn and U.S. v. Malcom). Another alternative is that each partner reports only the income from his or her personal services. The partners will also need to determine whether the provision making the new law retroactive to the partners’ pre-2005 date of registration results in a taxable transfer of property on the effective date of January 1, 2005.