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Monday, January 30, 2006


Internal Revenue Code Section 911 allows U.S. taxpayers to exclude some or all of their wage income for services performed in a foreign country when they spend most of the tax year in that country. In 1991, Dave Arnett tried to exclude wages earned while he was working in Antarctica.

The U.S. Tax Court has denied the exclusion to Mr. Arnett, based on the conclusion that Antarctica is not a foreign country since it has no government. The Tax Court relied on The Antarctic Treaty of December 1, 1959 which provides that all questions of sovereignty over Antarctica to be held in abeyance.

Interestingly, the U.S. Supreme Court has held that Antarctica is a foreign country for purposes of the Federal Tort Claims Act, and another U.S. federal court has held that is a foreign country for purposes of the Fair Labor Standards Act. Nonetheless, the Tax Court found that the definition of a foreign country is different under those laws than under the Internal Revenue Code.

Arnett v. Comm., 126 T.C. No. 4 (1/25/06)

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