Tax News

CCH (cch.taxgroup.com) reports:

  Distributions from the disposable military retirement pay of an individual's former spouse pursuant to a qualified domestic relations order (QDRO) were includible in the taxpayer's taxable income. There was no proof that the taxpayer's disbursement was in any way subject to double taxation or that income taxes were withheld from her share of the retirement pay prior to its disbursement.

  Although the taxpayer's interest in the retirement pay was calculated based on the retirement pay less income tax withheld, the QDRO specifically provided that taxes could only be withheld from the former spouse's pay, not from the taxpayer's share of the pay. Moreover, the QDRO did not state that the taxpayer's share of the retirement pay was not taxable or that it was subject to tax prior to distribution.

  A concurring opinion addressed an issue of first impression that the majority opinion sidestepped --namely, whether Tax Court Summary decisions have collateral estoppel effect. The concurring opinion concluded that the fact that a summary decision is not subject to appeal should not preclude the decision in that case from collaterally estopping the relitigation of the same issue by the same parties. Here, the issue before the court in this case had been decided against the taxpayer for a prior tax year in a Tax Court Summary decision (Mitchell, T.C. Summary Opinion 2004-160). The majority opinion declined to consider the collateral estoppel argument because the case had already been tried and presented a legal issue on the basis of largely undisputed facts.

L.G. Mitchell, 131 TC No. 15, Dec. 57,611

Other References:

 
Code Sec. 61

  CCH Reference - 2008FED ¶5507.121

 
Code Sec. 402

  CCH Reference - 2008FED ¶17,733.60

  Tax Research Consultant

  CCH Reference - TRC INDIV: 21,056
CCH Reference - TRC INDIV: 24,062.15