- 5 - Government, including military retirement pensions, may constitute gross income. Sec. 1.61-11, Income Tax Regs. The United States Supreme Court in McCarty v. McCarty, 453 U.S. 210 (1981), held that Federal law as then in effect precluded a State court from dividing military retirement pay as community property. However, in September of 1982, in response to McCarty, Congress enacted the Uniformed Services Former Spouses' Protection Act (USFSPA), Pub. L. 97-252, 96 Stat. 730, which authorized State courts to treat military retirement pay in accordance with State law, thereby allowing State courts to consider military pensions as community assets for distribution in divorce proceedings. That Act was made retroactive to the day before McCarty was decided. At the time her former husband retired in 1983, the Federal Government, consistent with the USFSPA, began paying to petitioner her designated share of the pension under the Decree. Petitioner concedes that the amount of the pension received in 1991, $7,258.37, represents an award of community property. It therefore constitutes gross income in that year under the general rule of section 61(a)(11). United States v. Mitchell, 403 U.S. 190 (1971); Eatinger v. Commissioner, T.C. Memo. 1990-310. Accordingly, respondent is sustained on this issue. Next we must consider whether petitioner is liable for the section 6662(a) accuracy-related penalty. Section 6662(a) imposes a 20-percent penalty on the portion of the underpaymentPage: Previous 1 2 3 4 5 6 7 Next
Last modified: May 25, 2011