Edward D. Clark - Page 7

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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                    
               “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           
                    (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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