More and more states are granting gay couples the right to marry. However, one case presently before the United States Supreme Court not only could open the door for more favorable gay marriage legislation, but could have major tax implications for gay couples.
In United States v. Windsor, Windsor and Spyer were same sex partners. When Spyer died, she left her estate to Windsor. After Windsor paid over $350 thousand in federal estate taxes, she filed for a refund on the ground that as Spyer’s surviving spouse, Spyer’s estate should pass to her free of federal estate taxes. The Internal Revenue Service denied the refund claim on the ground that Windsor was not a “spouse” within the meaning of Section 3 of DOMA, and thus not a “surviving spouse.” Windsor filed suit challenging the constitutionality of DOMA Section 3 arguing that since gay marriage was recognized by the state of New York, the IRS violated the equal protection component of the Fifth Amendment by allowing opposite sex couples, and not same sex couples, to be surviving spouses for federal estate tax purposes.
Hollingsworth v. Perry, a case challenging California’s Proposition 8, is also under cert review by the U.S. Supreme Court.
If the high court rules that same sex couples who are legally married for state purposes are entitled to equal tax treatment under federal law, same sex couples would be entitled to the same income and estate tax deductions opposite sex couples can avail. If applied retroactively, these opposite sex couples may also be allowed to file amended federal tax returns. Further, same sex couples could take advantage of many of the same income and estate tax deductions as opposite sex couples.
Givner & Kaye focuses on sophisticated income tax planning and compliance, tax litigation and procedure, estate planning, and asset protection plans for individuals and businesses in Beverly Hills, Calabasas, West Los Angeles, Hollywood, and other areas of Los Angeles, Orange, Ventura, San Bernardino, Riverside and Santa Barbara Counties. Call Los Angeles Estate Planning and Asset Protection Plan Attorneys Givner & Kaye at (310) 207-8008 today.