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conditions required for the effectuation of the amendments to old
section 931 were not satisfied, those amendments never became
effective; therefore, old section 931 continued to be applicable
for the years in issue. Thus, petitioners argue, they may
exclude the compensation they received for services performed on
Johnston Island during those years under old section 931.
Petitioners contend further that respondent’s failure to
amend section 1.931-1, Income Tax Regs., to exclude Johnston
Island from the list of possessions for which section 931
applies, shows that respondent believes that old section 931
remained in force for the years in issue. Petitioners further
argue that section 1.931-1, Income Tax Regs., is not inconsistent
with the statute because the conditions required by Congress for
the effectuation of the amendments to old section 931 have not
yet occurred.
2. Respondent’s Position
Respondent contends that, under TRA 1986 section 1277(a),
100 Stat. 2600, the amendments to old section 931 became
effective as to petitioners for taxable years beginning after
December 31, 1986. Thus, respondent maintains, section 931 does
not apply to petitioners for the years in issue because Johnston
Island is not a “specified possession” within the meaning of the
statute. Sec. 931(c). Respondent asserts, in effect, that any
provision of section 1.931-1, Income Tax Regs., which includes a
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