Josephine A. Fulgham - Page 6




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          tax is not excluded from total monthly retired pay when                     
          determining the member’s disposable retired pay.  See 10 U.S.C.             
          sec. 1408(a)(4) (1994); National Defense Authorization Act for              
          Fiscal Year 1991, Pub. L. 101-510, sec. 555(b)(3), (e)(2), 104              
          Stat. 1485, 1569, 1570.                                                     
               In general, the taxation of property interests is determined           
          under Federal law; however, it is local law that determines the             
          nature of the property interests created.  See United States v.             
          Mitchell, 403 U.S. 190, 196 (1971).  "Under Texas law, military             
          retirement benefits earned during marriage are community                    
          property".  Denbow v. Commissioner, T.C. Memo. 1989-92; Forsman             
          v. Forsman, 694 S.W.2d 112 (Tex. Civ. App. 1985).  Such benefits            
          are characterized as compensation for services that are earned              
          over the course of employment.  See Denbow v. Commissioner,                 
          supra.  Under Texas law, a spouse's rights in her husband's                 
          military retirement benefits become vested at the time such                 
          benefits are earned.  See id.  Property possessed by either                 
          spouse during, or on dissolution of, marriage is presumed to be             
          community property, unless clear and convincing evidence                    
          demonstrates that the property is separate property.  See Tex.              
          Fam. Code sec. 3.003 (West 2000).                                           
               In the present case, the parties did not present any                   
          evidence as to how long petitioner and Col. Fulgham were married,           
          how long Col. Fulgham was in the Air Force, or how the district             





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