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Respondent determined a deficiency in petitioner’s 1998
Federal income tax in the amount of $3,810. This Court must
decide: (1) Whether $10,891 received by petitioner as a portion
of her former spouse’s military retirement pay is includable in
her gross income in 1998, and (2) whether petitioner is entitled
to claim business expenses in an amount greater than the amount
allowed by respondent.
Some of the facts in this case have been stipulated and are
so found. Petitioner resided in Chula Vista, California, at the
time she filed her petition.
Petitioner and her former husband, Ronald L. Bunce (Mr.
Bunce), were divorced on February 7, 1986. Under the Decree of
Divorce, the Superior Court of California awarded petitioner 45.5
percent of Mr. Bunce’s gross military retirement pay as a
property settlement.
In 1998, petitioner received total payments of $10,891 from
the Defense Finance and Accounting Service (DFAS). Petitioner
did not report this amount on her 1998 individual income tax
return.
Under section 61(a), gross income includes all income from
whatever source derived, including pensions. Sec. 61(a)(11).
Military retirement pay is a pension. Eatinger v. Commissioner,
T.C. Memo. 1990-310. If a spouse of a service member has a
vested interest in the community income, then the spouse must pay
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