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Stenquist, supra. Just as the rights of divorced spouses under
California law do not depend on the form of the payments to the
employee spouse, neither should the Federal taxation of those
rights. Generally speaking, money is fungible. See United
States v. Sperry Corp., 493 U.S. 52, 62 n.9 (1989); Berry
Petroleum Co. v. Commissioner, 104 T.C. 584, 643 n.37 (1995),
affd. without published opinion 142 F.3d 442 (9th Cir. 1998).
Because of the fungibility of money, we did not know whether the
employee spouse in Eatinger paid the nonemployee spouse from his
retirement benefits or from other funds. Similarly, whether
petitioner paid his former spouse from current wages or
retirement benefits is not determinative here. See Taylor v.
Campbell, 335 F.2d 841, 844-845 (5th Cir. 1964) (the source of an
otherwise deductible payment will not affect its deductibility
when proceeds from a property division in a divorce are used to
pay alimony); Benedict v. Commissioner, 82 T.C. 573, 579 (1984)
(quoting and applying Taylor v. Campbell, supra).
C. Whether Petitioner’s Position Violates Assignment of Income
Principles
Respondent contends that the $25,511 petitioner paid to his
former spouse was an assignment of income that was taxable to
petitioner under Lucas v. Earl, supra. In Lucas v. Earl, supra
at 114-115, the U.S. Supreme Court disregarded for Federal income
tax purposes an agreement between a husband and wife to share
equally in the income each received. A holding for the taxpayers
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