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An exception to the above rule exists where the modification
is based on a showing "that the original decree did not correctly
state the divorce court's determination at the time of its
entry.” Johnson v. Commissioner, 45 T.C. 530, 533 (1966); see
Vargason v. Commissioner, 22 T.C. 100 (1954); Sklar v.
Commissioner, 21 T.C. 349 (1953). Thus, recognition for Federal
tax purposes of certain property rights retroactively conferred
at the State or local level is not absolute.
In the case before us, petitioner attempts to apply a city
ordinance whose sole purpose was to change retroactively the tax
status of the payments received by petitioner. Notably, section
10-12, as amended in 1999, does not permit the payment of
additional pension amounts when a request for retroactive
redesignation is granted. Thus the distinction drawn by the
amended ordinance as between nonoccupational injuries, for which
disability payments would be measured by 50 percent of salary,
and occupational injuries, for which the measure would be 66-2/3
percent, operated with prospective effect only. Petitioner
received no extra benefits for the years 1992 through 1998 as a
result of the city’s recharacterization of his status.
The city council’s intent in providing for the retroactive
redesignation of a disability pension is made clear in the
language of the ordinance: to “provide disability retirees with
an opportunity to redesignate benefits as occupational disability
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