Joseph D. Specking, et al. - Page 19




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          U.S. possession other than Guam, American Samoa, or the CNMI as a           
          U.S. possession for purposes of section 931 is inconsistent with            
          the statute, and hence invalid, for any taxable year beginning              
          after December 31, 1986.  Hereinafter, for purposes of this case,           
          possessions of the United States other than Guam, American Samoa,           
          the CNMI, and the Virgin Islands14 will be referred to as the               
          other U.S. possessions.                                                     
               Respondent maintains that, in TRA 1986 section 1272(a),                
          Congress clearly intended to limit the exclusion provided by                
          section 931 to bona fide residents of only Guam, American Samoa,            
          and the CNMI, and to income derived from sources therein.  Thus,            
          respondent argues, under TRA 1986 sections 1272(a) and 1277(a),             
          the existence of an implementing agreement is not a condition               
          precedent for the effectuation of the amendments to old section             
          931 for residents of Johnston Island; rather, under TRA 1986                
          sections 1271(b) and 1277(b), that requirement applies only to              
          bona fide residents of the specified possessions and to income              
          derived from sources within those possessions.  Therefore,                  
          respondent asserts, the question of whether a valid implementing            
          agreement exists between the United States and American Samoa,              
          Guam, or the CNMI is not relevant in this case.  Respondent                 
          argues that, for years beginning after 1986, bona fide residents            


               14We include the Virgin Islands here because other                     
          provisions in subtit. G of tit. XII apply specifically to the               
          Virgin Islands.  TRA 1986 secs. 1273-1277, 100 Stat. 2595-2600.             





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