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Marriage of Brown, 544 P.2d 561, 563 (Cal. 1976). Accordingly,
where California law applies, each spouse has a one-half interest
in military retirement benefits earned during marriage.
As a general rule, the Internal Revenue Code imposes a tax
on the taxable income of every individual. See sec. 1. For
purposes of calculating taxable income, section 61 defines gross
income as “all income from whatever source derived” unless
otherwise specifically excluded. Sec. 61. Gross income
specifically includes amounts derived from pensions. Sec.
61(a)(11). Military retired pay constitutes a pension within the
meaning of that section. See Eatinger v. Commissioner, supra (“A
military retirement pension, like other pensions, is simply a
right to receive a future income stream from the retiree’s
employer.”); sec. 1.61-2(a)(1), Income Tax Regs.; sec. 1.61-
11(a), Income Tax Regs. (“Pensions and retirement allowances paid
either by the Government or by private persons constitute gross
income unless excluded by law.”); see also 31 U.S.C. sec.
9502(1)(B)(x) (1994) (“Military Retirement System” is a
Government pension plan); 10 U.S.C. 1461(a) (2000) (defining the
Department of Defense Military Retirement Fund).
Petitioners do not dispute that the superior court awarded
petitioner a community property interest in Mr. Walton’s military
retired pay, and that petitioner received in 2000 total payments
of $4,958, with zero Federal income tax withheld, from DFAS for
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