- 10 - petitioner’s allotment is calculated based on Mr. Walton’s military retired pay after income taxes are withheld (not on his gross military retired pay). This calculation, however, does not mean that petitioner’s allotment is not taxable, nor does it mean that petitioner’s allotment is exempt from tax liability because taxes were already withheld on Mr. Walton’s allotment.12 Moreover, there is nothing in the QDRO stating that petitioner’s interest in Mr. Walton’s military retired pay is not taxable. As a matter of law, we are aware of no provisions in either the Internal Revenue Code or the USFSPA in effect at the time of the final judgment and the QDRO excluding petitioner’s allotment from gross income. Petitioners also contend that the superior court judge purportedly stated that petitioner’s portion would not be taxable. In this regard, petitioner testified at trial that the superior court judge stated that “their code was all wives were paid and they did not have to pay taxes on the money.”13 Although petitioners did not introduce into evidence a transcript of the divorce proceedings to corroborate such purported 12 Taxes withheld on Mr. Walton’s allotment would presumably have been credited to Mr. Walton’s account. 13 At trial, petitioner repeatedly referred to a purported “penal code” that made her interest nontaxable. Although it is unclear what purported penal code petitioner relies upon, we are not aware of any such penal code. Rather, it is the Internal Revenue Code that governs the taxation of the payments at issue. See sec. 61(a)(11).Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011