@user17568826280 thank you for closing the loop.
My basic thought process here is to show that neither IRS nor CA are in a tax loss position. Thus by keeping all world income attributable to the Resident spouse ( everything that bears her name directly or indirectly, no matter the type of income ) as recognized income, allows me to argue that this allocation is not for tax avoidance. It also ,as a byproduct, does not require the NRA spouse to be taxed on any Non-US sourced income. This path does not violate IRC 879 and generally complies with the CA being able to tax fully the Resident spousal income.
I am assuming here that the two spouses are de-facto acting as two single persons i.e. there is no co-mingling of funds/ asset ownership etc. and that they do not co-habitate for any appreciable length of time. It is as if they have in place a post-nup agreement to keep[ all their incomes / assets distinct. And the NRA spouse has no financial connection with the US -- they just happen to married to each other ( but have distinct separate lives ).
IMHO
Does this close this query or is there more I can do for you ?
