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2001-1 USTC par. 50,279 (D. Haw. 2001), affd. 313 F.3d 1214 (9th
Cir. 2002), they also disregarded admonitions from Mr. Smith’s
employer and from the IRS that compensation earned while working
on Johnston Island is taxable and may not be excluded from
income. In this regard, before petitioners signed their 2001
joint return, (1) Mr. Smith received multiple warnings from his
employer, one a little less than 15 months before petitioners
signed that return, that Johnston Island was not tax exempt and
that “therefore, standard tax obligations apply” and that certain
so-called assignment expenses were to be treated as compensation
that is taxable; (2) the IRS March 9, 2000 news release was
issued that, inter alia, stated: “Johnston Island is not a
‘specified possession’ for purposes of new section 931, so income
earned on the Island is not subject to exclusion”; and (3) IRS
Publication 570 for 2001 was issued that provided, inter alia,
that taxpayers who earned compensation while working on Johnston
Island “are not eligible for the possession exclusion discussed
here [in this publication]”. Under the circumstances extant when
petitioners signed their 2001 joint return, petitioners, at a
minimum, should have consulted a professional about whether to
claim the $99,980 exclusion of 2001 wages in that return and
relied on such professional’s advice. See Zmuda v. Commissioner,
731 F.2d 1417, 1422-1423 (9th Cir. 1984), affg. 79 T.C. 714
(1982). Petitioners do not contend that they did so and do not
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