- 6 -6 paid and also argues that she is entitled to one-half of the income tax credit attributable to that income. Respondent has determined a deficiency in petitioner's income tax for 1991 on the ground that the military retirement payment of $10,107 received by petitioner in 1991 and omitted from her return is gross income under section 61 and should have been reported as income on such return. Respondent's determinations are presumed correct, and petitioner has the burden of proving otherwise. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). In general, State law governs the creation of legal interests and rights in property and Federal law determines the Federal tax consequences of transactions affecting such rights. United States v. Mitchell, 403 U.S. 190 (1971); Estate of Gamble v. Commissioner, 69 T.C. 942, 948 (1978). As a preliminary matter, we conclude that the payment at issue in this case represents petitioner's community property interest in Kenneth's disposable retired pay. New Mexico is a community property State. N.M. Stat. Ann. sec. 40-3-6 to 40-3-17 (Michie 1994); Ruggles v. Ruggles, 116 N.M. 52, 62, 860 P.2d 182, 192 (1993). Community property is "property acquired by either or both spouses during marriage which is not separate property." N.M. Stat. Ann. sec. 40-3-8B. Separate property includes "property designated as separate property by a judgment or decree of any court having jurisdiction" and "property designated asPage: Previous 1 2 3 4 5 6 7 8 Next
Last modified: May 25, 2011