Stephen Jones - Page 4

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          respondent.  It is well settled that when a regulation conflicts            
          with a subsequently enacted statute, the statute controls.                  
          Bingler v. Johnson, 394 U.S. 741, 750 (1969); Commissioner v. S.            
          Tex. Lumber Co., 333 U.S. 496, 501 (1948); Farrell v. United                
          States,    F.3d at   .                                                      
               We decided this issue in Specking v. Commissioner, supra at            
          111.  One of the years at issue in that case was 1997, which is             
          the year at issue here.  In Specking, we said:                              
                    For the years in issue, section 931 does not apply                
               to the compensation petitioners received for services                  
               they performed on Johnston Island. * * * [Id.]                         
          The U.S. Court of Appeals for the Ninth Circuit, to which this              
          case is appealable, reached the same conclusion in Farrell.                 
               Petitioner also contends, on the basis of a footnote in                
          Specking v. Commissioner, supra at 106 n.15, that former section            
          931 still applies to Johnston Island.  The footnote states:                 
               Thus, had American Samoa and the United States not                     
               entered into an implementing agreement, income from                    
               sources within that possession would qualify for the                   
               exclusion provided by old sec. 931. * * * [Id.]                        
          We disagree.  Former section 931 applied to Johnston Island.                
          However, section 931, as amended by 1986 TRA section 1272(a),               
          does not.  Note 15 in Specking does not provide otherwise.  1986            
          TRA section 1277(a) and (b), 100 Stat. 2600, provides the                   
          following effective dates for the amendments to section 931:                
                    (a) In General.--Except as otherwise provided in                  
               this section, the amendments made by this subtitle                     
               shall apply to taxable years beginning after December                  
               31, 1986.                                                              

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