                        T.C. Memo. 1996-446



                      UNITED STATES TAX COURT



                  KAY A. CLAWSON, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 15334-95.               Filed September 30, 1996.



     James S. Nowak, for petitioner.

     Katherine Lee Wambsgans, for respondent.



                        MEMORANDUM OPINION

     KÖRNER, Judge:   Respondent determined a deficiency in

petitioner's Federal income tax for the year 1990 in the amount

of $10,741.

       All statutory references are to the Internal Revenue Code

in effect for the year in issue, and all Rule references are to
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the Tax Court Rules of Practice and Procedure, except as

otherwise noted.

       This case was submitted to the Court upon a full stipulation

of facts and exhibits without trial under the provisions of Rule

122.    Accordingly, after the settlement of other issues, it only

remains for us to decide the income tax effect of a distribution

which petitioner, as alternate payee, received from her former

husband's thrift and pension funds under a qualified domestic

relations order (QDRO) related to her divorce.

       At the time the petition herein was filed, petitioner was a

resident of Ohio.    Petitioner was divorced from her husband, Mr.

Willadsen, in 1989.    Petitioner remarried in late 1990 and for

that year timely filed a joint return together with her new

spouse, Mr. Clawson.    Mr. Clawson's liability is not an issue in

this case.

       In December 1989, petitioner and Mr. Willadsen executed a

property settlement agreement incident to their divorce.    In that

agreement, the parties agreed that, if covered by a QDRO, $11,930

would be paid to petitioner, representing one-half of the present

value of Mr. Willadsen's pension benefits due to him from the

Marathon Petroleum Co.    In addition, if covered by the QDRO,

$23,000 would be paid to petitioner in full satisfaction of her

share of the thrift plans administered by the Marathon Petroleum

Co. for the benefit of Mr. Willadsen.    The parties agreed that

thereafter petitioner would have no further interest or claim
                                 3

against any benefits that were due to Mr. Willadsen from his

present or future employer.

     The parties were formally divorced by the State courts of

Ohio in December 1989.   The decree of divorce ordered that the

settlement agreement be incorporated into and made part of the

judgment.   In March 1990, the appropriate Ohio court filed a

supplemental order in the divorce case which the parties agree is

the QDRO referred to in the parties' above settlement agreement,

and is a QDRO within the meaning of section 414(p).   At paragraph

4 of said QDRO, the Ohio court ordered: "Any taxes due to

Internal Revenue Services on the amount distributed from the

Member's R Account shall be the responsibility of Member".   The

parties do not dispute that the "R" account refers to the thrift

and pension plans of the Marathon Oil [or Petroleum] Co., which

were held for the benefit of Mr. Willadsen, who was the "Member",

and that petitioner under the QDRO was designated as the

alternate payee of such plans.

     Under the terms of the agreement, disbursement in the amount

of $34,930 was made from Marathon Oil Co. to petitioner,

representing the amount payable under the QDRO, plus $1,156.26 in

interest, all in May 1990.

     As part of her joint return for the year 1990, petitioner

did not report the amount of the QDRO distribution made to her.

Respondent thereafter issued to petitioner the statutory notice

of deficiency that is at issue in this case.
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     Within the broad rubric of section 61(a), which defines

gross income as all income from whatever source derived, the law

is clear that a distribution from a qualified retirement plan1 is

generally taxed to the distributee and includable in income in

the year distributed.   Specifically, section 402(a)(1), as it

applies to the facts in the instant case provides:

     Except as provided in paragraph (4) [not here
     relevant], the amount actually distributed to any
     distributee by any employees' trust described in
     section 401(a) which is exempt from tax under section
     501(a) shall be taxable to him, in the year in which so
     distributed, under section 72 * * *

     More specifically, section 402(a)(9) provides:

     For purposes of subsection (a)(1) and section 72, any
     alternate payee who is the spouse or former spouse of
     the participant shall be treated as the distributee of
     any distribution or payment made to the alternate payee
     under a qualified domestic relations order (as defined
     in section 414(p)).[2]

     There is no dispute between the parties here, that the

instrument in question was a QDRO within the meaning of section

402(a)(9).   There is also no dispute that petitioner was the

alternate payee under the provisions of the separation agreement

and the QDRO.   The parties have also agreed that the Ohio court

order of March 1990 in this case qualifies as a QDRO.   It would

     1
        There is no dispute between the parties that the subject
plans are "qualified plans" within the meaning of the Code.
     2
        The above quoted section of the Code was replaced by
section 402(e) under the provisions of Unemployment Compensation
Amendments of 1992, Pub. L. 102-318, sec. 521, 106 Stat. 291,
308, for years after Dec 31, 1992. For the year 1990, which is
here in issue, sec. 402(a)(9) was in effect.
                                 5

appear that the facts in this case fit the mandatory provisions

of section 402(a)(9), calling for the taxation of the

distribution here to petitioner as the alternate payee under a

QDRO.   Nevertheless, petitioner points to the language of the

QDRO itself, which provides that the tax on the amount

distributed here was to be the liability of Mr. Willadsen.    We

think this is nothing more than an attempt by the parties to the

divorce to change by their private contract (albeit sanctified by

a State court QDRO) the impact of Federal income tax in a

situation which is clearly provided for by the Code.    State law

may indeed determine the rights to and ownership of property, as

the divorce decree, settlement agreement and QDRO provide in this

case, Poe v. Seaborn, 282 U.S. 101 (1930), but the Internal

Revenue Code will determine how those property rights, once

established, shall be taxed.   Morgan v. Commissioner, 309 U.S. 78

(1940).   Where a distribution is made from a qualified plan to a

participant's former spouse pursuant to a QDRO, as here, such

former spouse is to be considered the "alternate payee" and taxed

on such distribution as the distributee; the subjective intention

of the former husband and wife in trying to agree to shift the

burden of taxation resulting from this transaction is not

effective or relevant.   Hawkins v. Commissioner, 86 F.3d 982

(10th Cir. 1996), revg. on other grounds 102 T.C. 61 (1994).

Petitioner may have a cause of action against her former spouse

under the separation agreement and the QDRO, but such cause of
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action is between them, and does not affect the rights of the

fisc.

     We accordingly conclude that the distribution to petitioner

from Mr. Willadsen's pension and thrift funds in 1990 was to

petitioner as alternate payee and was taxable to her under the

provisions of section 402(a)(9).

                                       Decision will be entered

                              under Rule 155.
