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$5,676 on their 1996 joint Federal income tax return. Upon
examination, respondent determined that the $5,676 was taxable
income.
Discussion
Section 61(a) defines gross income to include “all income
from whatever source derived, including (but not limited to) the
following items: * * * (11) Pensions”. Military retirement pay
is a pension. See Eatinger v. Commissioner, T.C. Memo. 1990-310.
The pension payments that petitioner received were made pursuant
to her community property interest in the military retirement
pension of her former husband. Petitioner, however, argues that,
if as originally set forth in the final judgment, her former
husband had received retirement payments and she had received the
payments from him, the amounts would not be taxable to her. But
that is exactly the situation in Eatinger v. Commissioner, supra,
where this Court held, on facts substantially identical to those
here, that under California law a former spouse had a property
interest in the former husband’s military pension and, therefore,
under section 61 the receipt of the military pension was taxable
to her even though it was received through the former husband.
The question is, under the applicable California law, to whom the
income belongs. The answer here, as in Eatinger, is that it
belonged to the former wife, petitioner. See also Graham v.
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Last modified: May 25, 2011