- 16 - limitation, even though foreign countries generally did not tax that income. H. Rept. 99-426, supra at 382, 1986-3 C.B. (Vol. 2) at 382; S. Rept. 99-313, supra at 358, 1986-3 C.B. (Vol. 3) at 358. Section 863(d) was enacted in 1986. Section 863(d)(1) provides generally that income earned by a U.S. person from personal services performed in an ocean-based activity is U.S. source income, and income derived by a non-U.S. person for such services is not U.S. source income. Sec. 863(d)(1); 1986 TRA sec. 1213(a), 100 Stat. 2540. Petitioner contends that Congress intended for section 863(d) to apply based on the residence, and not the citizenship, of the taxpayer. If petitioner’s contention were correct, section 863(d) would not apply to petitioner (i.e., it would not treat his income earned from personal services performed in international waters as U.S. source) because he is not a U.S. resident. Petitioner bases this contention on the following language in the House Ways and Means Committee report accompanying enactment of the 1986 TRA: all income from space or ocean activities is sourced in the country of residence of the person generating the income: income derived by a U.S. resident is U.S. source income and income derived by a nonresident is sourced outside the United States. * * * H. Rept. 99-426, supra at 382, 1986-3 C.B. (Vol. 2) at 382.Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Next
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