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II. Section 911
In Arnett v. Commissioner, 126 T.C. 89, 91-96 (2006) (Arnett
I), affd. 473 F.3d 790 (7th Cir. 2007) (Arnett II), we addressed
the arguments made by the parties herein regarding section 911.
The U.S. Court of Appeals for the Seventh Circuit agreed with our
analysis of section 911 and affirmed our conclusion that
Antarctica is not a “foreign country” pursuant to section 911 and
the regulations thereunder. Arnett v. Commissioner, 473 F.3d at
799. We shall not repeat our analysis from Arnett I herein. We
follow our analysis and holding in Arnett I and the analysis and
holding of the Court of Appeals in Arnett II.3
3 In Arnett v. Commissioner, 126 T.C. 89 (2006), affd. 473
F.3d 790 (7th Cir. 2007), we concluded our Opinion with a
citation of sec. 863(d) suggesting that sec. 863(d) provided an
additional reason to rule against the taxpayer. Id. at 96 (“See
also sec. 863(d) (providing that income earned in Antarctica by a
U.S. person is sourced in the United States).”). In Arnett v.
Commissioner, 473 F.3d at 797, the U.S. Court of Appeals for the
Seventh Circuit addressed sec. 863(d) in greater detail, stating:
At the outset, we think that it is important to
note that considering Antarctica not to be a “foreign
country” is compatible with the general statutory
scheme. Notably, section 911 is found under subtitle
A, chapter 1, subchapter N of the IRC, which is
designated “Tax Based on Income from Sources Within or
Without the United States.” Part I of this subchapter,
entitled “Source Rules and Other General Rules Relating
to Foreign Income,” deems any activity in Antarctica to
be “space or ocean activity.” In turn, the United
States is designated the source country of income from
such activity when earned by a citizen of the United
States. 26 U.S.C. § 863(d). Although this provision
does not provide a definitive answer as to whether
Antarctica is a “foreign country,” it supports the
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