Was a surviving spouse a purchaser subject to successor liability when the deceased owner bequeathed the business to the spouse?

Plain-English summary

Board staff asked whether a spouse became a successor under Revenue and Taxation Code section 6811 when the deceased owner bequeathed the business to that spouse.

California answered no. The spouse was not a purchaser because the transfer occurred by bequest rather than purchase. The deceased owner's estate remained responsible for the deceased's debts.

The 1996 memorandum reviewed and approved the original 1989 internal answer.

What this means for you

Surviving spouses, estates, probate advisers, and tax professionals

Distinguish inheritance from a purchase for consideration. This short opinion places the deceased's debts with the estate, but it does not resolve other probate or ownership questions.

Common questions

Q: Was the spouse a purchaser?

A: No.

Q: Did successor liability apply on that purchase theory?

A: No, because there was no purchase.

Q: Who remained liable for the deceased's debts?

A: The deceased owner's estate.

Citations and references

• California Revenue and Taxation Code § 6811

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 535.0073.300
• Original supporting opinion: 535.0073.300 PDF

Original ruling text

State of California

Memorandum
To:

Mr. Glenn Bystrom

From:

Gary Jugum

Subject:

Non-Attorney Opinions

Board of Equalization

Legal Division (MIC:82)

535.0073.300

Date:

July 10, 1996

I have reviewed Doug Carroll’s memorandum of October 4, 1989 to Regulation 1702 file. We are in agreement with his conclusion, as follows: Successor’s Liability. A question was asked whether a spouse, who is bequeathed his/her spouse’s business as a result of the spouse’s death, is a successor under Section 6811. The answer is no. A spouse is not a purchaser of a business when the business is bequeathed to the spouse by the owner. The estate of the deceased is liable for debts of the deceased. 10/4/89. Gary Jugum

State of California

Memorandum
To:

Reg. 1702 File

From:

Doug Carroll

Subject:

Successor Liability

Board of Equalization

535.0073.300

Date:

October 4, 1989

Question:
Is a spouse who is bequeathed his/her spouse’s business as a result of the spouse’s death a successor? Answer:

No. Not a purchaser of a business when business bequeathed to spouse by owner.

Estate of deceased is liable for debts of the deceased. Answered by: Gordon Adelman. Adelman states this response per Herb Cohen who has held several hearings on this same issue. cc:

R. Garcia
G. Kelly
Branch Sups.

DRC:de:DC10389