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section 61. Therefore, since section 61 is not one of the
“operative sections” which require “specific” sourcing of items
of income, section 61 is not affected by section 1.861-8(f)(1),
Income Tax Regs.
As the Court of Claims has explained:
The determination of where income is derived or
“sourced” is generally of no moment to either United
States citizens or United States corporations, for such
persons are subject to tax under section 1 and section
11, respectively, on their worldwide income. * * *
[Great-West Life Assur. Co. v. United States,
230 Ct. Cl. 477, 482, 678 F.2d 180, 183 (1982).]
Petitioners’ narrow reading of section 61, under which the
definition of income for purposes of section 61 would be limited
by the section 861 source-of-income rules, is without any legal
support and is erroneous. Petitioners do not provide us with any
case citations or other legal authority that reads section 61 and
the source-of-income rules of sections 861-865 as they do.
Again, the source-of-income rules of sections 861-865 and
the regulations under those sections are not definitional
provisions that attempt to define income. Rather, those source-
of-income rules simply distinguish between income that is earned
domestically and income that is earned overseas for purposes
primarily of calculating certain foreign tax credits to which
taxpayers who earn income from both domestic and overseas sources
may be entitled.
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Last modified: May 25, 2011