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bill on this point with modifications, none of which are relevant
here. H. Conf. Rept. 99-841, supra at II-600, 1986-3 C.B. (Vol.
4) at 600. Thus, section 863(d) as enacted applies to all U.S.
persons; i.e., to both U.S. citizens and residents.
Petitioner is a U.S. person because he is a U.S. citizen.
Thus, subject to our review of authorities cited by petitioner,
income earned by petitioner from performing services in
international waters is U.S. source income. Sec. 863(d)(2); sec.
1.863-8(d)(2)(ii)(A), Proposed Income Tax Regs., 66 Fed. Reg.
3911 (Jan. 17, 2001).
3. Source of Income Received by Possessions Residents:
Sec. 1.863-6, Income Tax Regs.
We next consider whether authorities cited by petitioner,
primarily section 931(a) and section 1.863-6, Income Tax Regs.,
lead to a result different than respondent contends applies under
section 863(d).
As stated above at paragraph A-1, section 931(a) provides an
exclusion for income sourced or effectively connected with a
trade or business in American Samoa. However, section 931 does
not define American Samoan source or effectively connected
income, and so we consider the sourcing rules contained in
sections 861-865 and related regulations in construing those
terms.
Sections 1.861-1 through 1.863-5, Income Tax Regs.,
establish rules for determining whether income is from a U.S.
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