John Norman Favero and Patricia Carolyn Favero - Page 5




                                        - 5 -                                         
               Petitioners argue that they are entitled to exclude Mr.                
          Favero’s wages as combat zone compensation or as foreign earned             
          income.  They also argue that they are entitled to Schedule C               
          deductions for Mrs. Favero’s “cottage industries”.                          
                                     Discussion                                       
               Gross income includes all income from whatever source                  
          derived unless otherwise specifically excluded.  Sec. 61(a).                
          Section 112 provides that certain compensation received by                  
          members of the Armed Forces of the United States serving in                 
          combat zones or hospitalized as a result of injuries received in            
          such zones shall not be included in gross income.  Section                  
          7701(a)(15) defines “Armed Forces of the United States” to                  
          include “all regular and reserve components of the uniformed                
          services which are subject to the jurisdiction of the Secretary             
          of Defense, the Secretary of the Army, the Secretary of the Navy,           
          or the Secretary of the Air Force, and each term also includes              
          the Coast Guard.”  Mr. Favero does not allege that he falls                 
          within this definition.  Mr. Favero was a civilian employed as a            
          merchant seaman by U.S. businesses in 1995, 1996, and 1997.  Mr.            
          Favero was not a member of the Armed Forces of the United States            
          during the years in issue; thus he does not qualify for the                 
          section 112 combat zone exclusion.  See Land v. Commissioner, 61            
          T.C. 675, 679 (1974).                                                       








Page:  Previous  1  2  3  4  5  6  7  8  9  10  Next

Last modified: May 25, 2011