                  T.C. Summary Opinion 2003-141



                     UNITED STATES TAX COURT



                   LINDA BUNCE, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 12161-02S.             Filed September 30, 2003.


     Linda Bunce, pro se.

     Karen Nicholson Sommers, for respondent.



     PAJAK, Special Trial Judge:    This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect at the time the petition was filed.   The decision to be

entered is not reviewable by any other court, and this opinion

should not be cited as authority.   Unless otherwise indicated,

subsequent section references are to the Internal Revenue Code in

effect for the year in issue, and all Rule references are to the

Tax Court Rules of Practice and Procedure.
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     Respondent determined a deficiency in petitioner’s 1998

Federal income tax in the amount of $3,810.    This Court must

decide:   (1) Whether $10,891 received by petitioner as a portion

of her former spouse’s military retirement pay is includable in

her gross income in 1998, and (2) whether petitioner is entitled

to claim business expenses in an amount greater than the amount

allowed by respondent.

     Some of the facts in this case have been stipulated and are

so found.   Petitioner resided in Chula Vista, California, at the

time she filed her petition.

     Petitioner and her former husband, Ronald L. Bunce (Mr.

Bunce), were divorced on February 7, 1986.    Under the Decree of

Divorce, the Superior Court of California awarded petitioner 45.5

percent of Mr. Bunce’s gross military retirement pay as a

property settlement.

     In 1998, petitioner received total payments of $10,891 from

the Defense Finance and Accounting Service (DFAS).    Petitioner

did not report this amount on her 1998 individual income tax

return.

     Under section 61(a), gross income includes all income from

whatever source derived, including pensions.    Sec. 61(a)(11).

Military retirement pay is a pension.   Eatinger v. Commissioner,

T.C. Memo. 1990-310.   If a spouse of a service member has a

vested interest in the community income, then the spouse must pay
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tax on that share of the income.    Denbow v. Commissioner, T.C.

Memo. 1989-92.    Because the $10,891 retirement pay received by

petitioner was from a community property interest in a military

pension, the payments constitute income to petitioner under

section 61(a)(11).    Porter v. Commissioner, T.C. Memo. 1996-475;

Eatinger v. Commissioner, supra; Denbow v. Commissioner, supra.

Accordingly, we hold for respondent.

     Petitioner argued that she should be entitled to some credit

for income tax withheld.   We are unable to consider petitioner’s

claim because credit for withheld tax does not enter into the

computation of deficiencies determined under section 6211(a) and

(b)(1).    Porter v. Commissioner, supra; Eatinger v. Commissioner,

supra.    However, as we noted in Eatinger, because a court’s

authority to divide a community military retirement pension is

limited to the amount that is net of income taxes, all income tax

withheld is attributable to the service member spouse.   If

petitioner has any remedies with respect to a credit for

withholding taxes, they lie elsewhere.

     On her Schedule C, Profit or Loss From Business, petitioner

reported no income and expenses of $9,330 for her craft sales and

marketing business.   Respondent disallowed a deduction of $1,723

for supplies and a deduction of $4,583 for other expenses.      The

other expenses were booth mat ($2,788), frames and packaging

($592), mockups and patterns ($788), bank charges ($26), and
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travel and hauling ($389).

     Petitioner had no records, claiming she lost them in an

accident.   Where the Court is satisfied that the taxpayer is

entitled to some deduction, but where the records are inadequate

to establish the amount of the deduction, the Court may make an

approximation of the amount of the deduction.        Cohan v.

Commissioner, 39 F.2d 540, 544 (2d Cir. 1930).       In such cases we

are cautioned to bear heavily against the taxpayer “whose

inexactitude is of his own making.”     Id.    Based on petitioner’s

testimony, we shall allow her to deduct $500 for supplies, $400

for mockups and patterns, and $300 for frames and packaging, in

addition to the $3,024 allowed by respondent.

     Reviewed and adopted as the report of the Small Tax Case

Division.

                                              Decision will be entered

                                       under Rule 155.
