- 20 -
Petitioner has failed to show that his positions on his
returns for the years in issue were taken with reasonable cause
and in good faith within the meaning of section 6664(c)(1). He
has presented no evidence that he acted in reasonable reliance on
the advice of a tax professional in asserting the positions taken
on his returns. He claims that he read the instructions to Form
2555-EZ before claiming the foreign earned income exclusion of
all of his income for the years in issue; however, those
instructions make clear that U.S. military retirement pay is not
foreign earned income. Petitioner failed to include his military
retirement pay as gross income and instead characterized those
amounts as wage income and excluded them.
Petitioner’s general arguments that his income earned in
international waters is foreign source income excludable under
section 911 from gross income, while extensive, ignore the plain
provisions of section 911 and the legislative regulations.
Petitioner relies on the general sourcing rules of sections 861
through 865, but those sections do not provide a rule for
sourcing income in petitioner’s particular situation. Petitioner
has not addressed the terms of the statute and the regulations
under section 911 and, in excluding all of his income from gross
income for Federal income tax purposes, has not shown that he
took care to assess properly his tax liability or that he had
reasonable cause in failing to do so. Thus, petitioner is liable
Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
Last modified: March 27, 2008