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1(b), Income Tax Regs. However, an exclusion applies to
possessions source income of U.S. citizens who reside in Guam,
American Samoa, and the Confederated Northern Mariana Islands
(CNMI). Sec. 931.3
Congress amended section 931 in 1986. Tax Reform Act of
1986 (1986 TRA), Pub. L. 99-514, sec. 1272(a), 100 Stat. 2593.
Under section 931 as amended, an individual who is a bona fide
resident of a “specified possession”4 (e.g., American Samoa)
during an entire tax year may exclude from gross income
(1) income derived from sources within any specified possession,
and (2) income effectively connected with the conduct of a trade
or business (“American Samoan source or effectively connected
income”) by that individual within any specified possession.
Sec. 931(a).5
3 Before 1986, sec. 931 provided an exclusion from U.S. tax
for American Samoan source income received by U.S. citizens, if
certain conditions were met. Specking v. Commissioner, 117 T.C.
95, 102 (2001).
4 For purposes of sec. 931(a), specified possessions are
Guam, American Samoa, and the Northern Mariana Islands. Sec.
931(c).
5 SEC. 931. INCOME FROM SOURCES WITHIN GUAM, AMERICAN
SAMOA, OR THE NORTHERN MARIANA ISLANDS.
(a) General Rule.--In the case of an individual
who is a bona fide resident of a specified possession
during the entire taxable year, gross income shall not
include--
(1) income derived from sources within
(continued...)
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