Internal Revenue Service
Revenue Ruling
TaxLinks.com
smRev. Rul. 65-37
1965-1 C.B. 514
Sec. 6011
IRS Headnote
The Internal Revenue Service, in determining whether citizens of the United States domiciled in Mexico are entitled to report their income on their United States Federal income tax returns on a community property basis, will make the determination on the basis of the facts and law presented in the individual case.
I.T. 1646, C.B. II-1, 145 (1923), revoked; I.T. 3916, C.B. 1948-2, 51, modified.
Full Text
Rev. Rul. 65-37
The Internal Revenue Service has been requested to clarify its position with respect to whether a citizen of the United States married to a nonresident alien and domiciled in Mexico is entitled to report income on the community property basis. Advice has also been requested as to whether Mexican nationals domiciled in that country commuting daily to work in the United States are entitled to report income on the community property basis.
In I.T. 1646, C.B. II-1, 145 (1923), it is held that, in general, married citizens of the United States residing in Mexico are not entitled to report their income on the community property basis.
The Republic of Mexico is divided into 29 States, two territories, and the Federal District in which the capital of the Republic is located. I.T. 1646 was based upon the fact that a decree of President Carranza in 1917 abolished the community property system for the Federal District and Territories (with certain reservations applicable to marriages previously contracted).
The latest information available to the Service indicates that the community property system is now in force in the entire Republic of Mexico and that the decree of President Carranza, upon which I.T. 1646 was premised, is no longer in effect. It further indicates, however, that there can be separation of property before the marriage by virtue of the articles of marriage, or during the marriage by agreement between the spouses or by judicial decree. (See Schoenrich, The Civil Code of Mexico (1950), as supplemented to 1957.) In addition, in at least one, and possibly more, of the Mexican States, the law of the state where the marriage takes place governs the community or separate status of property.
In view of these facts, and in view of the fact that the laws of the States of Mexico, like those of other states, are subject to amendment, the Service, in determining whether a citizen of the United States married to a nonresident alien and domiciled in Mexico is entitled to report his income on his United States Federal income tax returns on a community property basis, will make the determination on the basis of the facts and law presented in each individual case.
Such a United States citizen domiciled in Mexico who reports his income on the community property basis for purposes of the United States income tax will, therefore, be required to furnish copies of his articles of marriage and the pertinent parts of the applicable Mexican law, together with English translations, showing that the community property system is in force in the district, state, or territory of his domicile and is applicable to his income. An affidavit should also be furnished to the effect that there has been no separation of property by agreement between the spouses or by judicial decision.
The same rules are applicable to Mexican nationals domiciled in that country and commuting daily to work in the United States.
Nonacquiescences in the cases of Juan F. Brittingham, et al. v. Commissioner , 13 B.T.A. 375 (1928), and Clarence A. Miller v. Commissioner , 13 B.T.A. 1081 (1928) (nonacq. C.B. X-2, 82, and 95 (1931), respectively), were based on the absence of adequate proof before the United States Board of Tax Appeals (now the Tax Court of the United States) with respect to the existence of community property laws in the Mexican States of Durango and Tamaulipas.
I.T. 1646, C.B. II-1, 145 (1923), is revoked; and I.T. 3916, C.B. 1948-2, 51, is modified by eliminating from the last paragraph thereof the reference to I.T. 1646.