- 20 - Petitioner contends that, in the absence of regulations under section 931(d)(2), we should conclude that under section 1.863-6, Income Tax Regs., petitioner’s fishing income is American Samoa source and thus excludable under section 931(a). We disagree. Sections 1.861-1 to 1.863-5, Income Tax Regs., adopted before 1986, do not treat income earned from personal services performed in international waters as U.S. source income; instead, they provide that the source of income from personal services is the place where the services are performed. Sec. 1.861-4(b)(1), Income Tax Regs. Income earned from personal services performed in international waters was not treated as U.S. source income until section 863(d)(2) was enacted in 1986.12 Thus, section 1.863-6, Income Tax Regs., does not support petitioner’s position. The Secretary has not proposed that section 1.863-6, Income Tax Regs., be changed to refer to section 1.863-8, Proposed Income Tax Regs. Thus, section 1.863-6, Income Tax Regs., does not incorporate section 1.863-8, Proposed Income Tax Regs. As a result, income earned from services performed in international waters, which is sourced in the United States by section 863(d) and section 1.863-8, Proposed Income Tax Regs., is not treated as American Samoan source if earned by a resident of American Samoa. 12 Sec. 863(d) is effective for tax years beginning after Dec. 31, 1986. 1986 TRA sec. 1213(b); see also sec. 1.863-8(b), Proposed Income Tax Regs.Page: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Next
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