Gay M. Pfister - Page 9

                                        - 9 -                                         
          64 (Va. Ct. App. 1987), and Sawyer v. Sawyer, 335 S.E.2d 277 (Va.           
          Ct. App. 1985), are not on point.  These cases involve the                  
          question whether a Virginia court can order an equitable division           
          of pension benefits without agreement of the parties.  Here, the            
          parties entered into an agreement dividing the ownership interest           
          of the former husband’s military retirement benefit.  Pursuant to           
          Va. Code Ann. sections 20-107.3(H) and 20-109.1, the State court            
          had the authority and discretion to affirm, ratify, or                      
          incorporate by reference into the final order this valid                    
          agreement by the parties.  See Aster v. Gross, supra; Parra v.              
          Parra, supra; see also Mozley v. Commissioner, T.C. Memo. 2001-             
          125, affd. 22 Fed. Appx. 214 (4th Cir. 2001), cert. pending No.             
          01-10303 (May 16, 2002).                                                    
               Finally, petitioner’s argument that section 1041 renders               
          receipt of the pension payments nontaxable is misguided.  Section           
          1041 deals with transfers of property between spouses or incident           
          to divorce.  In general, it provides that (1) no gain or loss               
          shall be recognized to the transferor on such a transfer and (2)            
          the transferee succeeds to the transferor’s basis.  See Weir v              
          Commissioner, T.C. Memo. 2001-184.  Under Virginia law, and prior           
          to divorce, the rights to the pension that accrued to                       
          petitioner’s former husband were solely his.  In accordance with            
          USFSPA and the State court’s decree incorporating the parties’              
          agreement, however, petitioner received as her separate property,           

Page:  Previous  1  2  3  4  5  6  7  8  9  10  Next

Last modified: May 25, 2011