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retirement pay. That amount was paid directly to petitioner by
the U.S. Defense Financing and Accounting Service.
On petitioner's 1991 Federal income tax return, petitioner
did not report the $7,258.37 as gross income. Petitioner
concedes that the amount received as her share of her former
husband's military retirement pay was an award of community
property under the Decree. Furthermore, petitioner testified
that she was advised in 1983 by her attorney that the receipt of
the retirement pay was not taxable. Petitioner testified that
the treatment of the retirement pay on her 1991 Federal income
tax return was consistent with such advice.
Respondent contends that the military retirement benefits
received by petitioner pursuant to the Decree constituted her
community portion of those benefits and are taxable to her in the
year received. Respondent further posits that the Uniformed
Services Former Spouses' Protection Act, 10 U.S.C. sec.
1408(c)(1) (1994), authorizes State courts to treat retirement
benefits as community property. Therefore, since the State
courts have treated such pensions as community property, see
Wilder v. Wilder, 534 P.2d 1355, 1357 (Wash. 1975), the pension
received by petitioner in 1991 is taxable to her.
Under section 61(a), gross income includes all income from
whatever source derived. Gross income includes pensions. Sec.
61(a)(11). Pensions and retirement allowances paid by the
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