T.C. Memo. 2008-47
UNITED STATES TAX COURT
JOHN P. AND PHAIK HAHN, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 9139-04. Filed March 3, 2008.
Larry D. Harvey, for petitioners.
Randall L. Preheim, for respondent.
MEMORANDUM OPINION
VASQUEZ, Judge: This case is before the Court on
respondent’s motion for summary judgment pursuant to Rule 121.1
1
Unless otherwise indicated, all Rule references are to
the Tax Court Rules of Practice and Procedure, and all section
references are to the Internal Revenue Code in effect for the
years in issue.
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After a concession,2 the sole issue for decision is whether
petitioner John P. Hahn can exclude from income wages earned
during 2000 from working in Antarctica and petitioners can
exclude from income wages earned during 2001 from working in
Antarctica.
Background
At the time they filed the petition, petitioners resided in
Priest River, Idaho. During 2000, petitioner John P. Hahn
performed services at McMurdo Station in Ross Island, Antarctica.
On his 2000 Federal income tax return, petitioner excluded wage
income earned and received during 2000 for services performed in
Antarctica. During 2001, petitioners performed services at
McMurdo Station in Ross Island, Antarctica. On their 2001
Federal income tax return, petitioners excluded wage income
earned and received during 2001 for services performed in
Antarctica.
Discussion
I. Summary Judgment
Rule 121(a) provides that either party may move for summary
judgment upon all or any part of the legal issues in controversy.
Full or partial summary judgment may be granted only if it is
demonstrated that no genuine issue exists as to any material fact
2
Respondent concedes that no penalty pursuant to sec. 6662
is due from petitioner John P. Hahn for 2000 or from petitioners
for 2001.
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and that the legal issues presented by the motion may be decided
as a matter of law. See Rule 121(b); Sundstrand Corp. v.
Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th
Cir. 1994). We conclude that there is no genuine issue as to any
material fact and that a decision may be rendered as a matter of
law.
II. In General
Section 61(a) provides that gross income means all income
from whatever source derived. Accordingly, citizens of the
United States generally are taxed on income earned outside the
geographical boundaries of the United States unless the income is
specifically excluded from gross income. Specking v.
Commissioner, 117 T.C. 95, 101-102 (2001), affd. sub nom. Haessly
v. Commissioner, 68 Fed. Appx. 44 (9th Cir. 2003), affd. sub nom.
Umbach v. Commissioner, 357 F.3d 1108 (10th Cir. 2003).
Exclusions from income are construed narrowly, and taxpayers must
bring themselves within the clear scope of the exclusion. Id.
III. 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
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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
IV. Conclusion
Accordingly, for the reasons stated in Arnett I, Arnett II,
and herein, we conclude that petitioner John P. Hahn cannot
exclude from gross income wages earned during 2000 from working
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
conclusion that section 911 is not intended to apply to
income earned for services provided in Antarctica.
We take this opportunity to state our agreement with the Court of
Appeals’ conclusion set forth above. See also HCSC-Laundry v.
United States, 450 U.S. 1, 6 (1981).
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in Antarctica, and petitioners cannot exclude from gross income
wages earned during 2001 from working in Antarctica.
To reflect the foregoing,
An appropriate order and
decision will be entered.