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earned income” as “the amount received by such individual from
sources within a foreign country or countries which constitute
earned income attributable to services performed by such
individual”.
“A legislative regulation is made pursuant to a specific
grant of authority, often without precise congressional guidance,
to define a statutory term or prescribe a method of executing a
statutory provision.” Coca-Cola Co., & Includible Subs. v.
Commissioner, 106 T.C. 1, 19 (1996). Legislative regulations are
entitled to Chevron deference and are given controlling weight
unless they are arbitrary, capricious, or manifestly contrary to
the statute. Chevron U.S.A., Inc. v. Natural Res. Def. Council,
Inc., 467 U.S. 837, 843-844 (1984). The regulations promulgated
under the specific delegation of authority by Congress in section
911(d)(9) provide the following definition of a “foreign country”
for purposes of the foreign earned income exclusion under section
911:
(h) Foreign country. The term “foreign country”
when used in a geographical sense includes any
territory under the sovereignty of a government other
than that of the United States. It includes the
territorial waters of the foreign country (determined
in accordance with the laws of the United States), the
air space over the foreign country, and the seabed and
subsoil of those submarine areas which are adjacent to
the territorial waters of the foreign country and over
which the foreign country has exclusive rights, in
accordance with international law, with respect to the
exploration and exploitation of natural resources.
Sec. 1.911-2(h), Income Tax Regs.
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