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Petitioner does not challenge the validity of the regulation
defining a “foreign country” for purposes of section 911
primarily as any territory under the sovereignty of a Government
other than that of the United States. Under general principles
of international law, international waters are not under the
sovereignty of any nation. United States v. Louisiana, 394 U.S.
11, 23 (1969). Thus, international waters are not a “foreign
country” for purposes of section 911, and income petitioner
earned while traveling in international waters is not “foreign
earned income” excludable from gross income. See Plaisance v.
United States, 433 F. Supp. 936, 938-939 (E.D. La. 1977).
Without addressing or challenging the regulatory definition
of “foreign country” under section 1.911-2(h), Income Tax Regs.,
petitioner argues that we should read section 911 in conjunction
with the general sourcing rules under section 863(c) and conclude
that petitioner’s income earned while traveling in international
waters is foreign source income. Section 863(c) provides special
sourcing rules for certain transportation income when that
transportation begins or ends in the United States or one of its
possessions. Because U.S. citizens are subject to tax on their
worldwide income, sourcing rules are generally not relevant to
U.S. citizens. See Great-West Life Assur. Co. v. United States,
230 Ct. Cl. 477, 678 F.2d 180, 183 (1982); sec. 1.1-1(b), Income
Tax Regs.
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