John A. Francisco - Page 14




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          467, 473 (1990), affd. without published opinion sub nom. Stell             
          v. Commissioner, 999 F.2d 544 (9th Cir. 1993).  In Alexander, we            
          considered the effect of the Secretary’s failure to issue                   
          regulations under section 465(c)(3)(D).  Section 465(c)(3)(D)               
          provides that a limitation imposed on taxpayers by the at-risk              
          rules “shall apply only to the extent provided in regulations               
          prescribed by the Secretary.”  In Alexander, we held that, absent           
          regulations, the limitation does not apply.  That holding is                
          fully reconcilable with the principle that the Secretary’s                  
          failure to issue regulations does not bar application of a                  
          beneficial tax statute.  Nothing in the cases cited in the                  
          dissenting opinion suggests that section 931(a) does not apply              
          until regulations are issued under section 931(d)(2).                       
               3.   Conclusion                                                        
               We conclude that the exclusion under section 931(a) applies            
          even though the Secretary has not issued regulations under                  
          section 931(d)(2).                                                          
          C.   Whether Petitioner’s Income Was American Samoan Source                 
               Income or Was Effectively Connected With a Trade or Business           
               in American Samoa                                                      
               1.   Positions of the Parties                                          
               The parties dispute whether income earned by petitioner for            
          performing services while the M/V Sea Encounter was in                      
          international waters is excludable from gross income.  Respondent           
          contends primarily that, under section 863(d)(2), the income                
          petitioner earned for performing services in international waters           




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