Katherine A. Weir - Page 7




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          approximately equal division of the community was made, with                
          petitioner giving up her interest in ex-husband’s military                  
          retirement pension (the pension) and receiving in lieu thereof              
          “cash settlement payments” (the settlement payments).  Relying on           
          Balding v. Commissioner, 98 T.C. 368 (1992), discussed infra,               
          petitioner argues that such exchange was nontaxable.  Without               
          further discussion, petitioner concludes that the payments were             
          not items of gross income.                                                  
               D.  Discussion                                                         
                    1.  The Agreement                                                 
               In pertinent part, the agreement provides:  “The Husband               
          agrees to pay to the Wife her community property interest in his            
          military retirement pension upon receipt thereof.”  (Emphasis               
          added.)  In pertinent part, the addendum provides:  “This waiver            
          in no way waives the Petitioner Wife’s rights regarding the                 
          military retirement pension in which she has a vested community             
          interest”.  (Emphasis added.)  We have no doubt that, at the time           
          petitioner and ex-husband executed the agreement and addendum,              
          they assumed the pension to be community property.  We also have            
          no doubt that petitioner understood that the pension was not an             
          asset that could be liquidated, so that she would immediately               
          receive a portion of the proceeds.  While it is true that the               
          agreement contemplates that ex-husband would collect the pension            
          payments, petitioner has failed to convince us that she and                 






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