Community Property—Ownership During Probate of the Estate of One Spouse for Income Tax Purposes

In the case of U.S. v. Merrill, 211 F.2d 297, (9th Cir. 1954), the court held that when a wife dies in the state of Washington leaving solely community property and the surviving spouse serves as executor of her estate, only one-half of the executor's fee paid to the husband from community funds is taxable to him as income. The other one-half of the fee is chargeable to his share of community property. Further, the court in dictum said that when one spouse dies leaving an estate consisting only of community property, the executor or administrator is not the owner of the entire community property for tax purposes.

Income follows ownership and hence the income during probate is not taxable solely to the estate but rather one-half to the estate and one-half to the surviving spouse.