Edward D. Clark - Page 10

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                              (B) Exception for certain activities.--                 
                         The term “space or ocean activity” shall not                 
                                   (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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