- 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 underpayment
Page: Previous 1 2 3 4 5 6 7 Next
Last modified: May 25, 2011