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Part $1$

Under$$ present$-$day tax$$ law, community property rules are followed in allocating income between husband and wife. Is this consistent with Lucas v$.$ Earl? Explain.

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Part $1$

A$.$

Under community property$$ law, all property owned before the marriage and gifts and inheritances acquired after marriage are not included as property in the divorce. This is consistent with Lucas v$.$ Earl because the earnings from labor are taxed to the person who performs the services rather than the person who receives the benefit of the income.$$ Therefore, if a spouse purchases stock prior to the marriage it remains in their name only after the marriage.

B$.$

Under community property law community income is divided based on percentage of household income contribution.$$ Therefore, whichever spouse contributed more income they receive more property during the divorce. This is consistent with Lucas v$.$ Earl because the earnings from labor are taxed to the person who performs the services rather than the person who receives the income.$$ Therefore, a spouse that works from home receives the benefit of the income but is not taxed on the income.

C$.$

Under community property law community income is divided based on who benefited the most from the income. The question of who performed services that produce the income is ignored. This is contrary to Lucas v$.$ Earl because the person who performed the services is taxed not the person who received the benefits.

D$.$

Under community property law community income is divided equally between the spouses. The question of who performed services that produce the income is ignored. In one sense this is contrary to Lucas v$.$

Earl.

In another sense the services of both spouses contribute to income production. A spouse who works at home frees the other spouse to work outside the home.