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Background
The facts of this case were submitted fully stipulated under
Rule 122 and are so found.
Since 1991, petitioner has resided on Johnston Island, an
unincorporated U.S. Territory located approximately 700 nautical
miles southwest of Hawaii where petitioner has been employed as
an electrical engineer by Raytheon Demilitarization Co. or its
successor (Raytheon).
On April 30, 1991, petitioner signed an employment agreement
with Raytheon, which stated, among other things, that “Johnston
Island is not tax exempt; therefore, standard tax obligations
apply.”
For each of the years 1991 through 1996, on his Federal
income tax returns, the record herein does not indicate whether
petitioner treated the wages he received from Raytheon as taxable
or as nontaxable income.
On his timely filed 1997 joint Federal income tax return,
petitioner treated the $143,013 in Raytheon wages that he
received in 1997 as taxable income, and petitioner paid the
$44,629 in taxes relating thereto.
On his timely filed 1998 individual Federal income tax
return, petitioner treated the $156,741 in Raytheon wages that he
received in 1998 as nontaxable income, and petitioner did not pay
the Federal income taxes relating thereto.
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Last modified: May 25, 2011