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under section 61.1 Petitioners resided in Talent, Oregon, at the
time the petition was filed.
This case was submitted fully stipulated under Rule 122, and
the facts may be summarized as follows. Prior to 1978 petitioner
was married to Jack Wright. In 1978, they were divorced by a
final judgment entered by the Superior Court of California,
County of Santa Clara. At that time, Mr. Wright was entitled to
and was receiving retirement pay from the U.S. Navy. Under the
laws of California, petitioner had a community property interest
in Mr. Wright’s retirement pay. Under the property settlement
incorporated into the final judgment the parties waived “any and
all claim[s] to past, present and/or future spousal support”.
With regard to Mr. Wright’s retirement pay, the agreement
provided:
[Mr. Wright] currently being in receipt of retirement pay
from the United States Navy shall pay to Petitioner on a
monthly basis an amount equal to 43% of the net amount
received by him, or in the event that it is possible
considering the tax ramifications, said 43% shall be 43% of
the gross received by him if he is not in fact taxed upon
said 43%.
In October 1983, the Department of the Navy began directly paying
petitioner 43 percent of Mr. Wright’s retirement pay.
During 1996 petitioner received $5,676 from the Department
of the Navy. Petitioners did not include in gross income the
1 Section references are to the Internal Revenue Code in
effect for the year in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure.
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Last modified: May 25, 2011