Joseph D. Specking, et al. - Page 13




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          derived from sources within possessions of the United States,               
          except for Puerto Rico, the U.S. Virgin Islands, or Guam, if                
          certain conditions were satisfied.  Hereinafter, we refer to                
          section 931 before its amendment by TRA 1986 section 1272(a) as             
          old section 931.  Old section 931 did not define the term                   
          “possession of the United States”.  However, regulations                    
          promulgated under old section 931 provide, in pertinent part:               


               9(...continued)                                                        
               the conditions of both paragraph (1) and paragraph (2)                 
               are satisfied:                                                         
                         (1) 3-year period.--If 80 percent or more of                 
                    the gross income of such citizen (computed without                
                    the benefit of this section) for the 3-year period                
                    immediately preceding the close of the taxable                    
                    year (or for such part of such period immediately                 
                    preceding the close of such taxable year as may be                
                    applicable) was derived from sources within a                     
                    possession of the United States; and                              
                         (2) Trade or business.--If 50 percent or more                
                    of his gross income (computed without the benefit                 
                    of this section) for such period or such part                     
                    thereof was derived from the active conduct of a                  
                    trade or business within a possession of the                      
                    United States either on his own account or as an                  
                    employee or agent of another.                                     
                    (b) Amounts Received in United States.--                          
               Notwithstanding subsection (a), there shall be included                
               in gross income all amounts received by such citizens                  
               * * * within the United States, whether derived from                   
               sources within or without the United States.                           
                    (c) Definition.--For purposes of this section, the                
               term “possession of the United States” does not include                
               the Commonwealth of Puerto Rico, the Virgin Islands of                 
               the United States, or Guam.                                            
                                                                                     





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