Phyllis Herrmann Witcher - Page 7




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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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