- 13 - 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.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011