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Petitioner received an additional $9,051 of military retirement
pay in 2004 that he failed to report. Petitioner has conceded
that the interest income and U.S. military retirement pay he
received in the years in issue are not excludable as foreign
earned income.
Petitioner’s earned income for the years in issue consists
of wage income and vacation pay. The amount of petitioner’s
earned income for each of the years in issue is:
Year Total Earned Income
2002 $48,737.84
2003 55,373.77
2004 52,626.07
OPINION
Income Earned in International Waters
U.S. citizens are generally taxed on their worldwide income
unless a specific exclusion applies. Sec. 61(a) (“gross income
means all income from whatever source derived”); Cook v. Tait,
265 U.S. 47, 56 (1924); Specking v. Commissioner, 117 T.C. 95,
101-102 (2001), affd. sub nom. Umbach v. Commissioner, 357 F.3d
1108 (10th Cir. 2003), affd. sub nom. Haessly v. Commissioner, 68
Fed. Appx. 44 (9th Cir. 2003).
Section 911(a) provides in relevant part that a qualified
individual may elect to exclude, subject to limitations set forth
in section 911(b)(2), his or her foreign earned income from gross
income. Section 911(b)(1)(A) defines an individual’s “foreign
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