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because the divorce decree, in effect, so states. Although
petitioner’s ownership interest in the townhouse was properly a
matter before the divorce court, her 1994 Federal income tax
liability was not. State law determines the property ownership
of a taxpayer; Federal law controls the Federal income tax
consequences of transactions involving the property. See
Aquilino v. United States, 363 U.S. 509, 512-513 (1960).
The divorce court did not adjust petitioner’s preexisting
ownership interest in the townhouse. Had it done so, the Federal
income tax consequences resulting from the sale of the townhouse
could have been affected. See Urbauer v. Commissioner, T.C.
Memo. 1997-227. The relevant provisions in the divorce decree
relied upon by petitioner in support of her argument might create
a remedy for her as against her former spouse, but because those
provisions did not adjust her preexisting ownership interest in
the townhouse, they are not controlling here. See Neeman v.
Commissioner, 13 T.C. 397, 399 (1949), affd. 200 F.2d 560 (2d
Cir. 1952); Urbauer v. Commissioner, supra. Accordingly,
petitioner’s share of the gain realized from the sale of the
townhouse cannot be excluded from her income because of certain
provisions contained in the divorce decree.
Petitioner next argues that she should not have to include
any gain from the sale of the townhouse in her 1994 income
because, as of the close of that year, she had not received any
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