California Code of Regulations
Title 18 - Public Revenues
Division 2.5 - State Controller
Chapter 2 - Gift Tax
Article 1 - Definitions
Section 15104.51 - Transfer to Third Person of Real Property Owned by Husband and Wife in Joint Tenancy Created on or After September 11, 1957

Unless otherwise indicated it is assumed in this regulation that the transfers were not made for an adequate and full consideration in money or money's worth.

If a joint tenancy between husband and wife in real property is created on or after September 11, 1957 and before January 1, 1981, either by one spouse alone or by both spouses, and, pursuant to Revenue and Taxation Code Section 15104.5, then in effect, the donor does not elect to have the creation of the joint tenancy treated as a transfer by gift, and thereafter the real property is transferred prior to January 1, 1981 by the spouses to a third person, each spouse is deemed to have made a gift to the third person to the extent of, or in proportion to, his/her contribution to the joint tenancy.

If a joint tenancy between husband and wife in real property is created on or after September 11, 1957, and before January 1, 1981, either by one spouse alone or by both spouses, and, pursuant to Revenue and Taxation Code Section 15104.5, then in effect, the donor does not elect to have the creation of the joint tenancy treated as a transfer by gift, and thereafter the real property is transferred after January 1, 1981 by the spouses to a third person, each spouse is deemed to have made a gift of an undivided one-half interest in the property to the third person.

This regulation may be illustrated by the following examples:

EXAMPLE (1). A in November, 1957, with his own separate property created a joint tenancy in real property, having a market value of $30,000, in favor of himself and his spouse, B. A did not report the creation of the joint tenancy as a transfer by gift in his gift tax return for the year 1957. In July, 1958, A and B transferred the real property to a third person, C. The market value of the property at that time was $31,000. There was a gift in 1958 of $31,000 from A to C.

EXAMPLE (2). A and B, husband and wife, in November, 1957, with their own separate and individual funds purchased a parcel of real property in joint tenancy for $30,000. A contributed $25,000 and B contributed $5,000 to the purchase price. A did not report the creation of the joint tenancy as a transfer by gift in his gift tax return for the year 1957. In July, 1958, A and B transferred the real property to a third person, C. The market value of the property at that time was $31,500. A made a gift of $26,250 and B a gift of $5,250 to C in 1958.

EXAMPLE (3). A and B, husband and wife, in November, 1957, with community funds purchased a parcel of real property in joint tenancy for $30,000. In July, 1958, A and B transferred the real property to a third person, C. The market value of the property at that time was $31,500. A and B each made a gift of $15,750 to C in 1958.

EXAMPLE (4). In 1965, A transfers his separate real property, having a value of $25,000, to himself and his spouse, B, as joint tenants. A did not report the creation of the joint tenancy as a transfer by gift in his gift tax return for the year 1965. In June, 1981, A and B transferred the real property to a third person, C. The market value of the property at that time was $100,000. A and B each made a gift of $50,000 to C in 1981.

1. Amendment filed 7-2-81; effective thirtieth day thereafter (Register 81, No. 27).

Note: Authority cited: Section 16506, Revenue and Taxation Code. Reference: Section 15104, Revenue and Taxation Code.