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statement, from the Retirement Plan reporting the amount of the
distribution.
During 2001, petitioner received $16,909 pursuant to the
QDRO. On her return for that year, petitioner disclosed this
amount in its entirety on line 16a, “Total pensions and
annuities”, but reported “0” on line 16b as the taxable amount.
In explanation, petitioner wrote “see addendum (commun. prop.)”
and attached to her return a copy of the Superior Court’s July
1986 order. Petitioner had consistently followed this approach
for every year that she had received a distribution.
Respondent contends that the amount actually paid to
petitioner in 2001, i.e., $16,909, is includable, in its
entirety, in petitioner’s income for that year. Petitioner
contends that she received no property settlement per se in her
divorce from Mr. Kelley and that her community property interest
in his retirement benefits is essentially a “return of capital”
and therefore not taxable. Petitioner also points out that on
three separate occasions over the years, respondent’s Service
Centers have issued “no change” letters after inquiring into the
status of her interest in Mr. Kelley’s retirement benefits.
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Last modified: May 25, 2011