- 8 - 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.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 NextLast modified: March 27, 2008