Discussion:HOH & married & community property

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(Ok. But this st)
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{{ForumReplyPost|UserID=Solomon|Date=28 April 2009|Text=See Example 2 in that part of the Reg. for the computation.}} {{ForumReplyPost|UserID=Solomon|Date=28 April 2009|Text=See Example 2 in that part of the Reg. for the computation.}}
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 +{{ForumReplyPost|UserID=BEGooding|Date=April 28, 2009|Text=Ok. But this still does not address the issue of the TOTAL net losses allowable between an HOH & an MSF filer. I am not concerned about how to allocate the losses between the two. My question remains how much may each take. Assume the HOH filer has $3,000 of net losses, properly allocable to the HOH filer. The MFS filer has $1500 net losses, properly allocable to the MFS filer. Should they be able to claim $4500 total between the two of them? }}

Revision as of 17:52, 28 April 2009

Discussion Forum Index --> Advanced Tax Questions --> HOH & married & community property
Discussion Forum Index --> Tax Questions --> HOH & married & community property

BEGooding (talk|edits) said:

April 28, 2009
Hello >> taxpayers are married but lived apart for all of 2008 in Texas, a community property state. One qualifies to file HOH. I am having a problem splitting their return (into an HOH and an MFS).


Specifically, I am having a problem finding support in the rules that would allow the HOH spouse to take $3,000 in net capital losses and allow the MFS spouse to take $1,500. It seems if one spouse qualifies to file HOH, then that spouse is not limited by any of the limitations that would apply if they filed as MFS. For example, if they file as HOH, they will not be disallowed from taking the student loan interest deduction. Can anyone help with this issue for an HOH filer that is married? Thanks.

Garytax (talk|edits) said:

28 April 2009
Sec. 2(b)(1)

Head of Household can not be married.

Solomon (talk|edits) said:

28 April 2009
Under Sec. 7703(b) the HOH spouse is not considered married - I gather at least one qualifying child is residing with that spouse.

BEGooding (talk|edits) said:

April 28, 2009
Thank you Solomon. Yes, the TP has one qualifying child. I understand the HOH spouse is not "considered married" for purposes of determining if they qualify to take the HOH status. However, for purposes of allocating community income/deductions, I am wondering if the married status of the HOH filer would preclude them from taking $3k capital loss when their spouse is taking $1,500. Everything I am reading is pointing to the married couple being able to claim net losses of $4500 total versus the $3000 limitation that would normally apply. Do you agree that $4500 losses total should be permitted?

Solomon (talk|edits) said:

28 April 2009
From §1.1212-1(c)(iii)

"If a husband and wife make separate returns for the first taxable year beginning after December 31, 1963, or any prior taxable year, and they made a joint return for the preceding taxable year, any capital loss carryover from such preceding taxable year shall be allocated to the spouses on the basis of their individual net capital loss which gave rise to such capital loss carryover."

Garytax (talk|edits) said:

28 April 2009
Oops, good point Solomon.

Solomon (talk|edits) said:

28 April 2009
See Example 2 in that part of the Reg. for the computation.

BEGooding (talk|edits) said:

April 28, 2009
Ok. But this still does not address the issue of the TOTAL net losses allowable between an HOH & an MSF filer. I am not concerned about how to allocate the losses between the two. My question remains how much may each take. Assume the HOH filer has $3,000 of net losses, properly allocable to the HOH filer. The MFS filer has $1500 net losses, properly allocable to the MFS filer. Should they be able to claim $4500 total between the two of them?
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