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On July 6, 1999, a petition was filed in this Court by a
Raytheon employee who worked on Johnston Island (first Raytheon
employee) in which petition the taxability of wages earned by
U.S. citizens on Johnston Island was challenged. Specking v.
Commissioner, docket No. 12010-99. A regulation, which stated
that Johnston Island constituted a U.S. possession for purposes
of excluding from taxable income wages earned by U.S. citizens on
Johnston Island, formed the basis for the claim of nontaxability.
See sec. 1.931-1, Income Tax Regs.1 In subsequent similar cases
filed by Johnston Island employees, infra, other employees also
rely on this same regulation.
On July 12, 1999, another petition was filed in this Court
by another Raytheon employee who worked on Johnston Island
(second Raytheon employee) in which petition the taxability of
1 Sec. 1.931-1, Income Tax Regs., provides in part as
follows:
� 1.931-1. Citizens of the United States and domestic
corporations deriving income from sources within a
possession of the United States.--(a) Definitions.--(1) As
used in section 931 and this section, the term “possession
of the United States” includes * * * Johnston Island * * *.
(2) As used in section 931 and this section, the
term “United States” includes only the States, the
Territories of Alaska and Hawaii, and the District of
Columbia.
(b) General rule--(1) Qualifications. In the case of a
citizen of the United States or a domestic corporation
satisfying * * * [certain] conditions, gross income means
only gross income from sources within the United States
* * *.
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