- 18 - We conclude that petitioners’ arguments relating to (1) the effective date of the amendment by the TRA 1986 of old section 931 and (2) the failure by the Treasury to amend or withdraw section 1.931-1, Income Tax Regs., did not provide petitioners with a reasonable basis in claiming the $99,980 exclusion of 2001 13(...continued) effective date of the amendment by TRA 1986 of old section 931, the U.S. District Court stated: the outdated Section 931 was no longer in the Internal Revenue Code in the 1994 to 1996 period. Had Congress intended that the outdated Section 931 have continuing effect, it would have stated so in the amended Section 931. Farrell v. United States, 87 AFTR 2d 2001-1159, at 2001-1161 n.5, 2001-1 USTC par. 50,279, at 87,552 n.5. In rejecting the argument of the taxpayers in Farrell that sec. 1.931-1, Income Tax Regs., promulgated under old section 931 allowed them to exclude the income earned while working on Johnston Island, the U.S. District Court stated: Although Section 931 was amended, Regulation 1.931-1 was not amended to reflect the changes made to Section 931. See 10 United States Tax Reporter 9312 (2000) (explanation of IRC section 931) (“Caution: The Treasury has not yet amended Reg section 1.931-1 to reflect changes made by P.L. 99-514”). To read Regula- tion 1.931-1 as including Johnston Island as a “speci- fied possession” for purposes of 26 U.S.C. section 931 [(]1986) would be contrary to the plain intent of Congress, which is to allow income to be excluded from gross income for only Guam, American Samoa, and the Northern Mariana Islands. Accordingly, this court does not give any deference to the Treasury’s outdated interpretation of “possession” in Regulation 1.931-1. * * * Farrell v. United States, 87 AFTR 2d 2001-1159, at 2001-1160 to 2001-1161, 2001-1 USTC par. 50,279, at 87,552.Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
Last modified: May 25, 2011