The Internal Revenue Service has reversed its position regarding California domestic partners.  Under private letter ruling No. 201021048, the IRS now wants California domestic partners to combine their income and divide it equally.  Since it is a community property state, each share will be reported on their own tax return, instead of reporting just their own respective income.  Furthermore, this will not cause a taxable gift to occur.  The IRS has changed its decision based on the California 2007 law change where domestic partners must split their earned income equally.