Barbara E. Seaman - Page 13




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                    * * * Essentially, Pfister argues that because                    
               “disposable retired pay,” by definition, is calculated                 
               after taxes are withheld, it should not be taxed upon                  
               payment to the retiree’s spouse or former spouse.                      
               Implicit in that argument is Pfister’s contention that                 
               she is not the owner of one-half of her former hus-                    
               band’s retirement pay.  Therefore, the issue becomes                   
               whether Pfister owns her portion of her ex-husband’s                   
               retirement pay.                                                        
                    We hold that Pfister is the owner of one-half of                  
               her former husband’s retirement pay, and she is there-                 
               fore liable to pay the * * * income tax deficiency.                    
               * * *                                                                  
                     *      *      *      *      *      *      *                      
                    It is well established that military retirement                   
               payments “are gross income to the party who owns the                   
               right to those payments pursuant to the division of                    
               property in a divorce.”  Moreover, as the Tax Court                    
               noted, “[i]t is axiomatic in Federal tax law that                      
               income is taxable to the legal owner of the * * *                      
               property producing the income.”  Pfister provides no                   
               theory on which to contradict this conclusion.  Accord-                
               ingly, we conclude that the Tax Court properly deemed                  
               Pfister to be the owner of one-half of her former                      
               husband’s military retirement pay.  [Citations omit-                   
               ted.]                                                                  
          Pfister v. Commissioner, supra at 353-355.                                  
               We conclude that the holding of the Court of Appeals and its           
          rationale underlying that holding in Pfister v. Commissioner, 359           
          F.3d 352, which were based upon this Court’s holding and its                
          rationale underlying that holding in Pfister v. Commissioner,               
          T.C. Memo. 2002-198, are controlling in the instant case.  On the           
          record before us, we find that, pursuant to petitioner’s divorce            
          decree and petitioner’s property settlement agreement, petitioner           
          is the owner of 50 percent of Mr. Seaman’s disposable retired               







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