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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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