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letter notifying petitioner that the $156,741 in Raytheon wages
that petitioner received in 1998 constituted taxable income with
respect to which $41,898 in taxes was due. Attached to the
letter was Form 886-A, Explanation of Items, which stated:
Since your home is not in a foreign country, but a territory
of the United States, your earned income is not excludable
under Internal Revenue Code 911. See 1.911-2([g]) & (h) for
the United States and foreign country defined. Also, since
you are not a bona fide resident of a specified possession
“as defined in Internal Revenue Code 931(c)”, you do not
qualify for the possession exclusion.
In early 2000, petitioner paid to respondent $49,285,
reflecting the full $41,898 tax deficiency for 1998 determined by
respondent, including interest, and no formal notice of
deficiency for 1998 was ever mailed to petitioner. With respect
to 1998, respondent did not impose a penalty against petitioner
relating to the treatment on petitioner’s 1998 Federal income tax
return of his Raytheon wages as nontaxable income.
On February 28, 2000, a complaint was filed in Federal
district court by a fourth Raytheon employee who worked on
Johnston Island in which complaint the taxability of wages earned
on Johnston Island was challenged. Farrell v. United States, No.
CV 00-00164SOM-KSC.
The record herein does not include a copy of petitioner’s
1999 Federal income tax return, apparently filed in April of
2000, and the record herein does not indicate whether petitioner
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