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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
109-110.
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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