- 4 -
(11) Pensions * * *.
Petitioner does not argue, nor would we agree, that military
retirement pay is not a pension within the meaning of section
61(a)(11). Weir v. Commissioner, T.C. Memo. 2001-184; see also
Eatinger v. Commissioner, T.C. Memo. 1990-310; sec. 1.61-11,
Income Tax Regs. Additionally, we note: “It is axiomatic in
Federal tax law that income is taxable to the legal owner of the
* * * property producing the income”. Miles Prod. Co. v.
Commissioner, T.C. Memo. 1969-274, affd. 457 F.2d 1150 (5th Cir.
1972); see also Helvering v. Clifford, 309 U.S. 331 (1940). The
pension payments are gross income to the party who owns the right
to those payments pursuant to the division of property in a
divorce. See, e.g., Weir v. Commissioner, supra; Eatinger v.
Commissioner, supra; Lowe v. Commissioner, T.C. Memo. 1981-350.
In McCarty v. McCarty, 453 U.S. 210 (1981), the Supreme
Court held that State courts lacked the power to divide military
retirement benefits pursuant to divorce.3 The Court found that
3 McCarty v. McCarty, 453 U.S. 210 (1981), dealt with the
State of California and its community property regime. The issue
before the Court was whether the retiree’s military retirement
pay constituted property in which the retiree’s former spouse
could claim an interest. The case at hand deals with the laws of
the Commonwealth of Virginia, a common law State, where there is
equitable division of the former husband’s military retirement
pay. This distinction is of no consequence to our decision in
this case as the McCarty case and the applicable Federal
statutes, infra, apply both to community property jurisdictions
and to common law jurisdictions such as Virginia whose laws
(continued...)
Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011