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defines the term “possession” for purposes of old section 931.
As we have concluded above, that provision no longer applies to
petitioners. Consequently, the regulatory provision also has no
application to them and is obsolete as to petitioners.
We do not agree with petitioners that respondent’s failure
to amend section 1.931-1, Income Tax Regs., supports petitioners’
position. As the Supreme Court recently observed regarding
another unamended regulation provision: “The Treasury’s relaxed
approach to amending its regulations to track Code changes is
well documented. * * * The absence of any amendment * * * is
more likely a reflection of the Treasury’s inattention than any
affirmative intention on its part to say anything at all.”
United Dominion Indus., Inc. v. United States, 532 U.S. ___, 121
S. Ct. 1934, 1942-1943 (June 4, 2001).
E. Summary
For the years in issue, section 931 does not apply to the
compensation petitioners received for services they performed on
Johnston Island. Accordingly, we sustain respondent’s
determination that petitioners may not exclude any of that
compensation from their gross income for the years in issue under
section 931.
II. Section 911
Petitioners argue, in the alternative, that if they may not
exclude the compensation they earned on Johnston Island under
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