Kevin L. and Victoria L. Hargrove, et al. - Page 12

                                        -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              





Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  Next

Last modified: May 25, 2011