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Petitioner separated, but did not retire, from the United
States Navy on or around March 31, 1993, and he was paid a lump-
sum separation payment of $116,897.87 in lieu of his retirement
benefits from the United States Navy. At or about that time, Ms.
Maloney petitioned a court in Illinois, the State in which
petitioner then resided,1 requesting that the court either (1)
enforce the Virginia decree by requiring petitioner to pay to her
37.5 percent of the lump-sum amount or (2) modify the Virginia
decree to state explicitly that she was entitled to 37.5 percent
of any amount that petitioner received in lieu of his retirement
benefits. Later in that year, the Illinois court entered an
agreed order (Illinois order) providing in relevant part as
follows:
1. (a) That * * * [Ms. Maloney] shall keep as her
sole property the sum of $47,900.00 representing her
share and division of the net funds received by * * *
[petitioner] from the United States Navy. Such
division and transfer shall not be considered a taxable
event.
(b) * * * [Ms. Maloney] shall hold * * *
[petitioner] free, harmless and indemnified against any
state or federal income taxes due and owing in
connection with receipt by * * * [Ms. Maloney] of the
aforesaid $47,900.00.
(c) * * * [petitioner] shall keep as his sole
property the sum of $47,861.03 plus interest
representing his share and division of the net funds
received from the United States Navy.
1 Ms. Maloney resided in Florida at that time.
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