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Regs. For a particular taxable year of a taxpayer, there may be
a number of different applicable periods. See sec. 1.911-
2(a)(2)(ii), (d), Income Tax Regs., and the examples thereunder.
A taxpayer may use whichever applicable period maximizes the
foreign earned income exclusion. See sec. 911(d)(1)(B); sec.
1.911-2(a)(2)(ii), Income Tax Regs.6
Under section 911, a foreign country includes airspace,
lands, and territorial waters under the sovereignty of a country,
territory, or possession other than the United States. Farrell
v. United States, 313 F.3d 1214, 1216 (9th Cir. 2002); Arnett v.
Commissioner, 126 T.C. 89, 93-95 (2006), affd. 473 F.3d 790 (7th
Cir. 2007); sec. 1.911-2(g) and (h), Income Tax Regs.
Because international waters are not under the sovereignty
of any one country, time spent in international waters generally
does not apply toward the 330 foreign day requirement. See
Plaisance v. United States, 433 F. Supp. 936, 939 (E.D. La.
1977).
Although section 911(d)(1)(B) states that an aggregate of
330 full days of physical presence in a foreign country or
countries is required, the regulations thereunder define a “full
6Respondent’s Audit Technique Guide for Foreign Athletes and
Entertainers (October, 1994) suggests that respondent’s revenue
agents may use a more favorable applicable period than the
taxpayer initially indicated on a filed Form 2555, Foreign Earned
Income. 4 Audit, Internal Revenue Manual (CCH), par. 204,601, at
23,046.
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