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After concessions by the parties, the primary issue for
decision is whether petitioners qualify for the foreign earned
income exclusion of section 911 (hereinafter sometimes
“exclusion”) under the two conjunctive requirements thereof.
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for 2001 and 2002, and all
Rule references are to the Tax Court Rules of Practice and
Procedure.
FINDINGS OF FACT
This case was tried on April 27, 2006, in San Diego,
California. Some of the facts have been stipulated and are so
found.
At the time the petition was filed, Myron and Thelma Struck
resided in San Diego, California.
For approximately 27 years, from 1975 through early May
2002, Myron was employed full time as a yacht captain for owners
of private yachts. Thelma also was employed on the yachts as a
chef and stewardess.
Beginning in 1991 through May of 2002, Myron and Thelma were
employed on a yacht that was owned by Cush Automotive, a
California company, and that was operated primarily in foreign
territorial waters. Each year, Cush Automotive paid Myron and
Thelma a salary, their living expenses while on the yacht, and
their vacation travel expenses back to the United States.
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