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Ask Lane Your Own Question
Category: Tax
Satisfied Customers: 12691
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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This is a question about pensions being community property.

Customer Question

This is a question about pensions being community property. We live in NV (community property state). We are married and filing separately. We are retired and collecting pensions. We were not married before we retired and began collecting our pensions. When we contributed to our pensions (living in NJ), we were not married.
My question is: When filing, is our income from our pensions considered community property or personal property.
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi - I can help here. Your intuition is good. It's individually owned, because of the inception of title rule


Let me show you the regs from IRS - Just a sec

Expert:  Lane replied 1 year ago.

From the IRS internal manual (


A basic principle of community property law is that the initial character of property is determined on the date of acquisition. Under the "inception of title" rule followed by most community property states, property is deemed acquired on the date that the right to interest, title and possession arises. See, e.g., Estate of Cavenaugh v. Commissioner, 51 F.3d 597 (5th Cir. 1995).


As a result, the date that property is physically received is not relevant in determining character. Certain forms of income reflect

delayed payment, such as pensions, lottery winnings, or installment sales. Under this rule, these are characterized when the right to receive them is earned, not when they are received.


(Additionally, when rights to property are acquired over a period of time, vested allocation issues can arise. For example, assume a person who is working and vested in a pension gets married.)


If the person continues to work at the same place and accrues additional pension benefits, the retirement income accrued before the marriage would be characterized as separate property, while retirement income accrued after marriage would be characterized as community property.


(For a discussion of the pension allocation rule SeeIRM, Sale or Exchange of Separate Property.)

Customer: replied 1 year ago.
I think you answered my question very clearly. Is there more I should know?
Expert:  Lane replied 1 year ago.

No, I don't think so. Pensions earned before the marriage are NOT community property.


But to dot the i's ... Amounts earned during marriage should be pooled and split, for tax purposes