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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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