Stephen Jones - Page 5

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                    (b) Special Rule for Guam, American Samoa, and the                
               Northern Mariana Islands.--The amendments made by this                 
               subtitle shall apply with respect to Guam, American                    
               Samoa, or the Northern Mariana Islands (and to                         
               residents thereof and corporations created or organized                
               therein) only if (and so long as) an implementing                      
               agreement under section 1271 is in effect between the                  
               United States and such possession.                                     
          Thus, the 1986 TRA section 1272(a) amendments that apply to                 
          Johnston Island are effective for taxable years beginning after             
          December 31, 1986.  However, under note 15 in Specking, the                 
          amendments that apply with respect to American Samoa apply only             
          when and so long as an implementing agreement is in effect.                 
          Thus, petitioner may not exclude income under the pre-1986 TRA              
          version of section 931.  See Specking v. Commissioner, supra at             
          B.   Whether Petitioner May Exclude From Income Under Section 911           
               $70,000 That He Received for Services He Performed on                  
               Johnston Island                                                        
               Petitioner contends that $70,000 of his income from                    
          employment on Johnston Island is exempt from tax under section              
          911.  Petitioner relies on section 1.931-1(b)(2), Income Tax                
          Regs., which provides:                                                      
                    (2) Relationship of sections 931 and 911.  A                      
               citizen of the United States who cannot meet the 80-                   
               percent and the 50-percent requirements of section 931                 
               but who receives earned income from sources within a                   
               possession of the United States, is not deprived of the                
               benefits of the provisions of section 911 (relating to                 
               the exemption of earned income from sources outside the                
               United States), provided he meets the requirements                     
               thereof.  In such a case none of the provisions of                     
               section 931 is applicable in determining the citizen’s                 
               tax liability. * * *                                                   

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