- 17 - the TRA 1986 amended old section 931 because the Treasury did not amend or withdraw that regulation. Id. at 110-111. In Specking, we held that old section 931 no longer applied to the taxpayers there, id., and that “Consequently, the regulatory provision also has no application to them and is obsolete as to petitioners [in Specking]”, id. at 111. In so holding, we stated: We do not agree with petitioners that respondent’s failure to amend section 1.931-1, Income Tax Regs., supports petitioners’ position. As the Supreme Court recently observed regarding another unamended regula- tion provision: “The Treasury’s relaxed approach to amending its regulations to track Code changes is well documented. * * * The absence of any amendment * * * is more likely a reflection of the Treasury’s inattention than any affirmative intention on its part to say anything at all.” United Dominion Indus., Inc. v. United States, 532 U.S. * * * [822, 836-837 (2001)]. Id.13 13Even before we issued our Opinion in Specking v. Commis- sioner, 117 T.C. 95 (2001), affd. sub nom. Haessly v. Commis- sioner, 68 Fed. Appx. 44 (9th Cir. 2003), affd. sub nom. Umbach v. Commissioner, 57 F.3d 1108 (10th Cir. 2003), the United States District Court for the District of Hawaii (U.S. District Court) held that taxpayers who earned compensation during 1994, 1995, and 1996 while working on Johnston Island must include such compensation in gross income for those years. Farrell v. United States, 87 AFTR 2d 2001-1159, 2001-1 USTC par. 50,279 (D. Haw. 2001), affd. 313 F.3d 1214 (9th Cir. 2002). In so holding, the U.S. District Court rejected the arguments of the taxpayers in Farrell and petitioners here (1) that the amendment by the TRA 1986 of old section 931 was not effective because certain imple- menting agreements were not entered into between the United States and the specified possessions identified in sec. 931 after that amendment and (2) that the taxpayers were entitled to rely on sec. 1.931-1 Income Tax Regs., promulgated under old section 931 because that regulation was not amended or withdrawn by the Treasury after the TRA 1986 amended old section 931. In reject- ing the argument of the taxpayers in Farrell with respect to the (continued...)Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
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