- 25 -
Section 1.861-4(b)(1), Income Tax Regs., provides that,
where appropriate, income from services performed within and
without the United States may be allocated on the basis of time.
Under that approach, the amount included in gross income is the
amount that bears the same relation to total wages as the number
of days the taxpayer performed services in the United States
bears to the total number of days for which the taxpayer
performed services for which wages were paid.
We disagree that all of petitioner’s fishing-related income
was sourced in American Samoa. The location of the payor, the
place of contracting, and the place of payment do not control for
purposes of sourcing service income. Sec. 861(a)(3); Dillin v.
Commissioner, 56 T.C. 228, 244 (1971); sec. 1.861-4(a), Income
Tax Regs. Petitioner was chief engineer of the M/V Sea Encounter
while it was fishing in international waters, which was the vast
majority of the days petitioner performed the services at issue
here. We believe that the fact that petitioner was paid based on
fish tonnage shows that petitioner’s services performed in
American Samoa were not disproportionately important. Thus, we
find no reason to depart from the proportionality rules of
section 1.861-4(b), Income Tax Regs.
We conclude that the portion of petitioner’s income that is
eligible for the section 931(a) exclusion is based on the number
of days he worked in American Samoa.
Page: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 NextLast modified: May 25, 2011