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Mrs. Glassman objected to the administrator's determination,
and on July 11, 1991, filed a Motion to Show Cause, in which she
alleged that the administrator (1) improperly calculated the
amount of accrued benefits and (2) unreasonably delayed payments.
She contended that the administrator should have applied the Rule
of 75 because, on the date specified in the QDRO, Mr. Oddino met
the age and service requirements. She asked the court to
recalculate her benefits and award interest, attorney's fees, and
costs. The Hughes Plan responded that: (1) California law and
the Employment Retirement Income Security Act prohibit the plan
from using the Rule of 75 to calculate Mrs. Glassman's share of
Mr. Oddino's benefits; and (2) the Rule of 75 is an incentive for
early retirement that is applicable only if the employee actually
retires.
On May 3, 1992, the Superior Court denied Mrs. Glassman's
motion and held that the administrator had not erred in its
calculation. The California Court of Appeals, Second Appellate
District, reversed the lower court's holding and, on July 24,
1996, entered judgment for Mrs. Glassman. The Hughes Plan filed
a timely appeal with the California Supreme Court, where the
action was pending on the date we held trial.
Petitioners, on their 1992 joint tax return, claimed an
$80,468.31 itemized deduction for attorney's fees paid in
connection with their litigation against the Hughes Plan. In the
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