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2. Section 893
Petitioner contends that the $1,238,100 that he received
from NYSL in 1996 is exempt from tax under section 893(a)4
because he was an employee of a foreign government. We disagree.
Salaries and wages received by an employee as compensation
for official services to a foreign government or international
organization are exempt from tax. Sec. 893(a). However, income
received by employees of a foreign government or international
organization from sources other than their salary, fees, or wages
is subject to Federal income tax. Sec. 1.893-1(a)(3), Income Tax
Regs. Thus, petitioner’s lottery winnings are not exempt from
tax under section 893(a).
4 Sec. 893(a) provides in part:
SEC. 893. COMPENSATION OF EMPLOYEES OF FOREIGN GOVERNMENTS OR
INTERNATIONAL ORGANIZATIONS.--
(a) Rule for Exclusion.--Wages, fees, or salary of any
employee of a foreign government or of an international
organization (including a consular or other officer, or a
nondiplomatic representative), received as compensation for
official services to such government or international
organization shall not be included in gross income and shall be
exempt from taxation under this subtitle if-- * * *
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