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Petitioner was awarded 48.85 percent of her former husband’s
Navy retirement pay, and received $5,836 directly from the DFAS
in 1998. Petitioner argues that she is not the legal owner of
the military pension; therefore, the payments distributed to her
are not includable in her gross income. The court of common
pleas determined that the Navy pension was a marital asset
available for equitable distribution incident to the divorce.
The court of common pleas awarded her an “equitable distribution
of 60 percent of the marital estate * * * as set forth in the
plan”. Petitioner has a right to those distributions that were
awarded to her. 10 U.S.C. sec. 1408(c)(2).
Petitioner alleges that the military considers the military
pension to be “pay” because it is taxed before a distribution
(and the distribution is net of taxes).3 Petitioner has not
presented any reason why the distributions to her, if they are
“pay”, are not includable in her income.
Petitioner argues that the military pension distributions
she received are excludable from gross income by virtue of
section 1041. An owner of an interest in a military retirement
pension, like other pensions, has a right to receive future
3 Petitioner relies on 10 U.S.C. sec. 1408(a)(4) and
Eatinger v. Commissioner, T.C. Memo. 1990-310 for support for the
argument that the military pension distribution is net of income
taxes. Congress amended the statute in the National Defense
Authorization Act for Fiscal Year 1991, Pub. L. 101-510, sec.
555(a)-(d), 104 Stat. 1569, 1570, and income tax withholding is
no longer taken into account in determining disposable military
retired pay under 10 U.S.C. sec. 1408(a)(4)(C).
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