Edward D. Clark - Page 8

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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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