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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).
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