Final answer:
In community property states, community property contributions to separate businesses can be transmuted to separate property through various mechanisms, such as an agreement between spouses or changing the title of the property.
Step-by-step explanation:
In community property states, community property contributions to separate businesses can be transmuted to separate property through the process of transmutation. This means that the community property becomes the separate property of one spouse. Transmutation can occur through various mechanisms, such as an agreement between spouses or by changing the title of the property.
For example, let's say a husband and wife live in a community property state and the husband starts a business using community funds. If both spouses agree that the business should be considered the husband's separate property, they can sign a transmutation agreement to legally designate it as such. The business would then be treated as the husband's separate property in the event of a divorce or separation.