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See 10 U.S.C. sec. 1408(c)(2) (the USFSPA “does not create any
right, title, or interest which can be sold, assigned,
transferred, or otherwise disposed of (including by inheritance)
by a spouse or former spouse”); Pfister v. Commissioner, supra
(“The USFSPA did not create any right or entitlement to military
retired pay”).
In conclusion, under applicable Colorado law at the time of
the separation agreement and divorce decree, Mr. Jefferies’
future retired military pay did not constitute property.
Consequently, we are unpersuaded that the separation agreement
gave (or could have given) petitioner any ownership interest in
any such “property”. Rather, consistent with the lower court’s
reasoning in In re Marriage of Ellis, supra, we conclude that the
military retirement payments are most reasonably regarded as
periodic payments in satisfaction of petitioner’s marital
property rights. Accordingly, the military retirement payments
are not includable in petitioners’ gross income. Cf. Mivec v.
Commissioner, T.C. Memo. 1981-695 (“[I]t is well settled that
where, upon divorce, a husband makes payments in satisfaction of
the property rights of his wife, the amounts received by the
wife, even though periodic and incident to a divorce, are capital
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