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in which a divorce or other related decree is issued.
[S. Rept. 97-502, at 4.]
A court in Pennsylvania has the authority to equitably
divide marital property in an action for divorce. 23 Pa. Cons.
Stat. Ann. sec. 3502(a) (West 1998). It has been clearly
established in Pennsylvania that military pension benefits
qualify as marital property and are subject to equitable
distribution. 23 Pa. Cons. Stat. Ann. secs. 3501, 3502 (West
1998); Berrington v. Berrington, 409 Pa. Super. 355, 362 (1991),
affd. 534 Pa. 393 (1993).
As indicated, income from property is taxed to the owner of
the property. Eatinger v. Commissioner, T.C. Memo. 1990-310,
(citing Helvering v. Clifford, 309 U.S. 331 (1940); Poe v.
Seaborn, 282 U.S. 101 (1930); Lucas v. Earl, 281 U.S. 111
(1930)).
Under section 1041(a), no gain or loss is recognized on a
transfer of property from an individual to a spouse or former
spouse if the transfer is incident to a divorce. Such transfers
are treated as nontaxable gifts, and the transferee has the
transferor’s basis. Sec. 1041(b). In enacting section 1041 in
the Deficit Reduction Act of 1984, Pub. L. 98-369, sec. 421, 98
Stat. 793, Congress indicated its belief that “it is
inappropriate to tax transfers between spouses.” H. Rept. 98-
432, part II, at 1491 (1984).
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