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(B) Exception for certain activities.--
The term “space or ocean activity” shall not
include--
(i) any activity giving rise to
transportation income (as defined in
section 863(c))
For purposes of the Internal Revenue Code, the definition of
“United States person” includes any citizen of the United States.
Sec. 7701(a)(30)(A). Although he resides in Scotland, petitioner
is a U.S. citizen. His income earned in international waters is
income from a “space or ocean activity” as defined in section
863(d)(2). Thus, that income is sourced in the United States.
Sec. 863(d)(1)(A).
While petitioner may, as the parties have stipulated,
exclude income earned in foreign ports from gross income, his
income earned while working in international waters does not
constitute foreign earned income for purposes of the exclusion
under section 911 and must be included in his gross income for
the years in issue.
Meal Expense Deductions
Section 162 permits taxpayers to deduct all ordinary and
necessary business expenses paid or incurred during the taxable
year and specifically includes traveling expenses (including
amounts expended for meals and lodging other than amounts that
are lavish or extravagant under the circumstances) while away
from home in the pursuit of a trade or business. Sec. 162(a)(2).
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Last modified: March 27, 2008