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treated thereon his Raytheon wages received in 1999 as taxable or
as nontaxable income.
On February 12, 2001, the District Court for the District of
Hawaii decided Farrell v. United States, 87 AFTR 2d 1159, 2001-1
USTC par. 50,279 (D. Haw. 2001), and held that Johnston Island
does not constitute a foreign country for purposes of section 911
and does not constitute a specified possession for purposes of
section 931.3 Therefore, the District Court, in spite of the
conflicting regulation, which listed Johnston Island as a
possession, concluded that wages earned on Johnston Island
constituted taxable income. Thereafter, the taxpayer in Farrell
filed a timely appeal to the Court of Appeals for the Ninth
Circuit of the District Court’s decision.
On his electronically filed 2000 individual Federal income
tax return, filed on approximately March 4, 2001, petitioner
treated the $185,048 in Raytheon wages that he received in 2000
as nontaxable income, and petitioner did not pay any Federal
income taxes relating thereto.
Petitioner’s retained copy of his electronically filed 2000
Federal income tax return, which is in evidence herein, reflected
3 All references herein to sec. 931 are to sec. 931 as
amended by the Tax Reform Act of 1986, Pub. L. 99-514, sec. 1272,
100 Stat. 2593 (TRA 1986), and all references to former sec. 931
are to such section prior to amendment by TRA 1986.
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Last modified: May 25, 2011