Editorial note: This page is educational and is not legal, tax, or financial advice. Basis, community-property classification, and estate treatment produce real dollar outcomes for a surviving spouse. Consult a California licensed estate attorney and a CPA about your specific facts before selling inherited bullion or filing a return.
Last updated: August 13, 2026 · By Gold California Editorial
Quick answer: Under IRC Section 1014(b)(6), physical gold bullion acquired with community funds during a California marriage receives a full basis reset to fair market value at the first spouse's death. Both halves step up, not just the decedent's half. That double step-up is unavailable to joint tenants in a non-community-property state. A date-of-death appraisal is the key document.
Short on time? The essentials
- California is a community property state under Family Code Section 760. Bullion bought with community funds during the marriage is community property by default.
- Federal tax law, in IRC Section 1014(b)(6), resets both halves of community property to date-of-death fair market value, not just the decedent's half.
- IRS Publication 555 states this rule directly. When one spouse dies, the total FMV of the community property, including the surviving spouse's part, generally becomes the basis of the entire property.
- In a non-community-property state with joint tenancy title, only the decedent's half steps up. The survivor keeps the original cost basis on the other half.
- California conforms to federal basis rules through Revenue and Taxation Code Section 18031, which adopts Subchapter O of Chapter 1 of Subtitle A.
- The single most important document is a written date-of-death appraisal by a qualified precious metals appraiser, tied to specific serial numbers or bar counts.
- Common traps: bullion titled in one spouse's name, a prenuptial or transmutation agreement, or a move into or out of California during the holding period.
This page explains a California-specific tax mechanic that matters for surviving spouses holding physical gold coins or bars acquired during the marriage. The relevant rule is IRC Section 1014(b)(6), read together with the California community-property system.
The result, when the facts line up, is a full basis reset on the entire holding at the first spouse's death. The surviving spouse can sell soon after and owe no federal capital-gains tax on the pre-death appreciation. This page walks the mechanic, one worked example, and the documentation to preserve it.
What community property means for bullion in California
California Family Code Section 760 sets the default. All property acquired by a married person during the marriage while domiciled in California is community property, except as otherwise provided by statute. Physical bullion follows the same rule as a brokerage account or a car.
A couple who buys 20 ounces of gold with community earnings during the marriage owns that gold as community property by operation of law. Each spouse holds an undivided one-half interest. Title in one spouse's name alone does not by itself convert the character.
Bullion funded from traceable separate funds can stay separate. A pre-marital coin collection, or coins purchased from a documented inheritance account, remain the acquiring spouse's separate property under Family Code Section 770. Tracing needs records, which is why receipts and account statements matter.
The community-property label is not a technicality. It drives which basis rule applies at the first spouse's death, and that in turn drives the taxable gain or lack of gain when the surviving spouse sells.
How IRC Section 1014(b)(6) applies the full step-up
IRC Section 1014(a) is the general rule. Property received from a decedent takes a new basis equal to fair market value on the date of the decedent's death, or on the alternate valuation date if elected on Form 706.
For most jointly held property in non-community states, that reset touches only the decedent's share. If a couple owned a stock account as joint tenants with right of survivorship, one-half steps up, and the surviving spouse keeps the original cost basis on the other half.
Community property gets different treatment. IRC Section 1014(b)(6) covers property that represents the surviving spouse's one-half share of community property held by the decedent and the survivor. The rule applies as long as at least one-half of the whole community interest was includible in the decedent's gross estate.
Read plainly: both halves of community property step up. IRS Publication 555, revised February 2025, states the same rule. The total fair market value of the community property, including the part that belongs to the surviving spouse, generally becomes the basis of the entire property.
The rule applies to community property held under the laws of any community-property state. California qualifies. It also applies to registered domestic partners for California-law purposes, though the federal treatment of RDPs follows a separate line described in IRS Publication 555.
The worked example: 20 ounces bought in 2010
Facts. A California couple, married and domiciled in the state throughout, buys 20 ounces of gold in 2010 using community earnings. The purchase price is a labeled illustrative $1,200 per ounce, so the community basis is $24,000. Both spouses are on the community property books; neither has a separate-property claim.
First death. The first spouse dies in 2025. At the date of death, gold trades at a labeled illustrative $2,650 per ounce. The fair market value of the 20-ounce holding is $53,000. The surviving spouse commissions a written date-of-death appraisal that ties FMV to the specific coins or bars held.
Community-property step-up under IRC Section 1014(b)(6). Both halves reset to $2,650 per ounce. The surviving spouse's new basis in the entire 20-ounce holding is $53,000, not $24,000.
Contrast with joint tenancy in a non-community-property state. If the same couple lived in a non-community-property state and held the gold as joint tenants, only the decedent's 10 ounces would step up. The decedent's half moves to $26,500. The survivor's half stays at the original $12,000. Total new basis is $38,500.
Sale at the labeled illustrative $2,650 per ounce. Under community property, the sale of the 20 ounces for $53,000 produces zero taxable gain, because basis equals proceeds. Under the joint-tenancy scenario in a non-community-property state, the sale for $53,000 produces a $14,500 taxable gain on the survivor's half.
Tax difference at the collectibles rate. Physical gold bullion is a collectible under IRC Section 408(m). The maximum federal long-term rate on collectibles is 28 percent. On $14,500 of gain, the federal collectibles tax runs up to $4,060. California adds ordinary state income tax on that same gain.
Numbers use labeled illustrative prices. Actual outcomes turn on the recorded date-of-death FMV, holding period, applicable brackets, and the reader's specific facts. Consult a CPA before selling.
Community property versus joint tenancy: the basis math
| Item | California community property (both spouses on the books) | Joint tenancy in a non-community-property state |
|---|---|---|
| Original community or joint basis (2010, 20 oz at $1,200) | $24,000 | $24,000 |
| Basis reset at first spouse's death (2025, 20 oz at $2,650 FMV) | Both halves reset to FMV under IRC Section 1014(b)(6) | Only the decedent's one-half resets to FMV under IRC Section 1014(a) |
| Surviving spouse's new basis, decedent's half | $26,500 (10 oz at $2,650) | $26,500 (10 oz at $2,650) |
| Surviving spouse's new basis, survivor's half | $26,500 (10 oz at $2,650) | $12,000 (10 oz at original $1,200) |
| Total new basis in the 20-ounce holding | $53,000 | $38,500 |
| Taxable gain on immediate sale at $2,650 per ounce | $0 | $14,500 |
| Estimated federal tax at the 28 percent collectibles rate | $0 | Up to $4,060 |
| Controlling authority | IRC Section 1014(b)(6); IRS Publication 555; California Family Code Section 760; California Revenue and Taxation Code Section 18031 | IRC Section 1014(a); state joint-tenancy statutes; no Section 1014(b)(6) claim |
Sources: 26 U.S. Code Section 1014, Cornell LII; IRS Publication 555, Community Property, revised February 2025; California Family Code Section 760; California Revenue and Taxation Code Section 18031. Numbers are labeled illustrative. Checked August 2026.
After-tax proceeds compared, community property versus joint tenancy
The chart below applies the same worked example at three labeled illustrative date-of-death prices. It compares the surviving spouse's after-tax proceeds on an immediate sale, holding the 28 percent federal collectibles rate constant and setting state tax to zero for a clean federal-only comparison. State tax reduces both bars by the same absolute amount on the joint-tenancy scenario alone.
| Date-of-death price per ounce | FMV of 20 oz | CP after-tax proceeds (federal only) | JT non-CP state after-tax proceeds (federal only) |
|---|---|---|---|
| $2,000 (labeled illustrative) | $40,000 | $40,000 | $37,760 |
| $2,650 (labeled illustrative) | $53,000 | $53,000 | $48,940 |
| $3,300 (labeled illustrative) | $66,000 | $66,000 | $60,120 |
Federal collectibles rate held constant at 28 percent per IRC Section 1(h)(4) and IRS Topic 409. State tax excluded for clarity. Numbers are labeled illustrative and assume immediate sale after death. Checked August 2026.
Documentation a surviving spouse should obtain
The step-up is a rule of federal tax law. It becomes a real dollar outcome only when the surviving spouse can prove the numbers to the IRS on audit. Three documents carry most of the weight.
The first is a written date-of-death appraisal of the specific coins or bars. A qualified precious metals appraiser or a reputable dealer with an appraisal desk should provide an itemized valuation. The valuation should tie to serial numbers on bars and to type and year on coins, using the spot price and premium on the date of death.
The second is the community-property record. Purchase receipts, brokerage or dealer statements, storage-vault invoices, and safe-deposit box records should show that community funds paid for the metal during the marriage. Bank statements from the funding account help complete the trail.
The third is the estate paperwork. If the estate files Form 706, the appraised FMV appears on Schedule F. If no Form 706 is required, the surviving spouse still keeps the appraisal and the community-property record in the personal tax file. IRS Publication 559, revised for 2025 returns, describes survivor and executor recordkeeping duties.
Steps a surviving spouse takes to document the step-up
The steps below outline how a California surviving spouse, or the personal representative of the first-death estate, secures the paperwork needed to claim the community-property basis step-up on physical gold. They describe the general mechanics; they are not legal or tax advice, and a CPA or California licensed estate attorney should confirm the answer for your facts.
- Locate the bullion and inventory it in writing. Open the home safe or safe-deposit box in the presence of a witness where practical, then produce a written inventory listing each coin type and year, each bar mint and serial number, and the total ounces held.
- Fix the date of death and the applicable FMV benchmark. Note the calendar date of death. The relevant spot benchmark is the London PM Fix, or another well-published spot reference, on that date.
- Commission a written date-of-death appraisal. Retain a qualified appraiser or a reputable California dealer with an appraisal desk. Ask for an itemized statement showing FMV per item, method used, and the appraiser's signature and credentials.
- Assemble the community-property record. Collect original purchase receipts, dealer invoices, brokerage statements, and the funding-account statements from the marriage. The paper trail supports the Section 760 community-property classification.
- Confirm title and any transmutation. Review any spousal writings under Family Code Sections 850 through 853, any prenuptial or postnuptial agreement, and any account titling that could rebut the community-property presumption.
- Coordinate the estate filing. Work with a CPA to decide whether Form 706 is required or advisable, and to enter the appraised FMV on Schedule F if it is. Keep a copy of Form 706 and the appraisal in the survivor's records.
- Record the new basis for future returns. Log the stepped-up basis, per ounce and in total, in the survivor's personal records. Attach a copy of the appraisal to the personal tax file so a future Form 1099-B or dealer buyback statement can be reconciled.
- Consult a CPA before selling. Timing, holding period, and installment-sale mechanics can shift the outcome. A CPA reviews the appraisal, the community-property record, and the sale plan before proceeds hit the bank.
Consult a California estate planning attorney before signing any postmortem allocation or beneficiary release, and a CPA before filing the survivor's return or Form 706.
Common traps that can shrink or eliminate the step-up
The community-property step-up is generous, but it is not automatic. Several fact patterns can reduce or defeat the full reset.
Bullion titled or invoiced in one spouse's name only. Title alone does not defeat the community-property character, but it invites an IRS challenge on audit. Contemporaneous funding records from a joint account, or a signed community-property acknowledgment, help preserve the classification.
A prenuptial or postnuptial agreement that carves out precious metals. A signed writing under Family Code Section 852 can transmute property from community to separate. If the prenup or a later transmutation removes the bullion from the community, only the owning spouse's half is treated as decedent property, and the survivor gets no Section 1014(b)(6) claim.
Coins purchased with traceable separate funds. Inheritance funds, pre-marital savings, or gift funds under Family Code Section 770 can produce separate-property bullion. Only the decedent's separate-property share steps up under Section 1014(a); the survivor's own separate metal does not, because it did not pass at death.
A move into California mid-holding. Metal acquired while domiciled in a non-community-property state, then physically moved to California, becomes quasi-community property under Family Code Section 125 for California divorce and death purposes. Quasi-community property is treated as community property for California-law purposes, and Section 1014(b)(6) generally recognizes that treatment.
A move out of California mid-holding. A California couple that moves to a non-community-property state and re-titles the bullion as joint tenants can lose the double step-up. The new title may control at the first death, subject to state characterization rules that vary.
Missing or vague appraisal. An oral estimate or a hand-written note without credentials does not defend an audit. Without a written date-of-death appraisal, the IRS may adjust FMV downward or challenge the Section 1014(b)(6) claim.
Community property with right of survivorship title. Metal held in a CPWROS account under California Civil Code Section 682.1 keeps the full Section 1014(b)(6) step-up and adds a nonprobate transfer at death. A pure joint tenancy under Family Code Section 2581 has different rules at dissolution and can invite dispute.
California conformity to federal basis rules
California income tax follows the federal basis rules in this area. Revenue and Taxation Code Section 18031 states that Subchapter O of Chapter 1 of Subtitle A of the Internal Revenue Code applies for California purposes, except as otherwise provided. Subchapter O is the part of federal law that covers gain or loss on disposition of property.
Subchapter O includes Section 1014. That means the surviving spouse's stepped-up basis for federal purposes is generally the same stepped-up basis used to compute California state tax on a later sale. If federal gain is zero, California gain on that same sale is generally zero too.
California has no separate state estate tax at present. The federal estate tax rules govern whether Form 706 is required, and the federal Section 1014 basis determines the survivor's basis for both federal and state purposes on a later sale.
Community property step-up on gold, answered
Does California actually allow a double step-up on physical gold?
The double basis reset is a federal rule under IRC Section 1014(b)(6), not a state rule. It applies to community property held under the laws of any community-property state. California qualifies. Physical gold bullion held as community property fits the rule, so the survivor's basis in the whole holding generally resets to date-of-death FMV.
What is the difference between community property and joint tenancy at the first spouse's death?
Community property under Family Code Section 760 gets a full two-half step-up under IRC Section 1014(b)(6). Joint tenancy in a non-community-property state gets only a one-half step-up under Section 1014(a). Same title label, very different tax result, purely because of state characterization.
Do we need to file a federal estate tax return (Form 706) to claim the step-up?
Not necessarily. The 2025 federal basic exclusion amount is $13.99 million per person (IRS Rev. Proc. 2024-40). Estates below that ceiling may not need Form 706. The Section 1014(b)(6) basis rule still applies. A CPA confirms whether Form 706 is required or advisable for portability or valuation purposes.
What if the gold is in a home safe and never bought through a dealer with paperwork?
Reconstruction is harder but not always fatal. Bank withdrawal records, contemporaneous emails, and a written narrative of the acquisition can support the community-property character. The date-of-death appraisal is still needed to fix FMV. A CPA or estate attorney reviews the reconstruction before a sale.
Does a prenuptial agreement that keeps assets separate defeat the step-up?
A prenup that classifies bullion as one spouse's separate property removes it from the community. Under Section 1014(a), only the decedent's separate share of a jointly used asset steps up. The survivor's own separate property never steps up, because it does not pass at death. Confirm the prenup's exact language with an attorney.
We moved from Nevada to California with our gold. Does the step-up apply?
Metal acquired while domiciled in Nevada, then moved to California during the marriage, is often quasi-community property under Family Code Section 125. California treats quasi-community property as community property for California-law purposes at death. IRS practice under Section 1014(b)(6) generally follows the state characterization, subject to the facts and any transmutation writings.
Is the sale of gold coins taxed at the collectibles rate?
Physical gold bullion and gold coins fall inside the collectible definition in IRC Section 408(m). Long-term capital gains on collectibles are taxed at a maximum federal rate of 28 percent under IRC Section 1(h)(4). When the surviving spouse sells at basis, the federal tax on the pre-death appreciation is zero, which is the point of the step-up.
Do we still owe California income tax on a post-step-up sale?
California conforms to federal basis rules through Revenue and Taxation Code Section 18031. If federal gain is zero after the step-up, California gain on that same sale is generally zero. Any gain accruing after the date of death is taxable for both federal and California purposes at ordinary California rates.
Sources
- Cornell LII, 26 U.S. Code Section 1014 (Basis of property acquired from a decedent), including Section 1014(b)(6) on community property. Checked August 2026.
- IRS, Publication 555, Community Property, revised February 2025 (basis of community property at spouse's death). Checked August 2026.
- IRS, Publication 559, Survivors, Executors, and Administrators, for 2024 returns. Checked August 2026.
- California Legislative Information, Family Code Section 760 (Community property default). Checked August 2026.
- California Legislative Information, Family Code Section 770 (Separate property). Checked August 2026.
- California Legislative Information, Family Code Section 125 (Quasi-community property). Checked August 2026.
- California Legislative Information, Family Code Section 852 (Transmutation formalities). Checked August 2026.
- California Legislative Information, Probate Code Section 100 (Passage of community property at death). Checked August 2026.
- California Legislative Information, Civil Code Section 682.1 (Community property with right of survivorship). Checked August 2026.
- California Legislative Information, Revenue and Taxation Code Section 18031 (California conformity to IRC Subchapter O). Checked August 2026.
- Cornell LII, 26 U.S. Code Section 408(m) (Definition of collectible for gold bullion and coins). Checked August 2026.
- IRS, Topic No. 409, Capital gains and losses (collectibles maximum 28 percent rate). Checked August 2026.
- IRS, Revenue Procedure 2024-40 (2025 inflation adjustments including the $13,990,000 estate exclusion). Checked August 2026.
