-12-
section 912. Section 912 excludes from income foreign area
allowances and cost of living allowances given to civilian
officers and employees of the U.S. Government. Taxpayers must be
civilian employees or officers of the U.S. Government to be
entitled to the exclusion for the types of allowances under
section 912. Sec. 912; Adair v. Commissioner, T.C. Memo. 1995-
493.
Mr. and Mrs. Hargrove and Mr. and Mrs. Breeding stipulated
that they were employees of TRW, not the U.S. Government, for
each relevant year. They each also signed closing agreements
identifying TRW as their employer. Moreover, the common law
factors defining the employer-employee relationship indicate that
TRW, not the U.S. Government, employed petitioners. See Matthews
v. Commissioner, 907 F.2d 1173 (D.C. Cir. 1990), affg. 92 T.C.
351 (1989). Mr. and Mrs. Hargrove and Mr. and Mrs. Breeding have
not shown that the U.S. Government controlled the methods or
manner of their work or had the right to discharge them. See
Matthews v. Commissioner, 92 T.C. at 361. Mr. and Mrs. Hargrove
and Mr. and Mrs. Breeding are not civilian officers or employees
of the U.S. Government and have not shown that they received
these types of allowances. Accordingly, they are not entitled to
any exclusion from income.
Mr. and Mrs. Hargrove and Mr. and Mrs. Breeding also argue
that we should look to the treaty under which the defense
facility was established to define the terms “employer” and
“employee” because those terms are not defined in sections 119
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