Taxing Lessons Case Summaries

Case — Foreign Income Exclusion

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Map of Antarctic Region
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Is Antarctica a foreign country?


Taxpayer Says: Wage income earned in Antarctica is excluded from income under the foreign earned income exclusion (Code Section 911).

Internal Revenue Service Says: The exclusion does not apply.


From internal revenue code section 61(a):  Gross income means all income from whatever source derived. US citizens generally are taxed on income earned outside the United States unless the income is specifically excluded.

From internal revenue code section 911: A “qualified individual” may elect to exclude from gross income his or her “foreign earned income.”

From internal revenue code section 911(b)(1)(A): “Foreign earned income” means,  in general, “the amount received by such individual from sources within a foreign country or countries which constitute earned income attributable to services performed by such individual” during the period set forth in section 911(d)(1).

From internal revenue code section 911(d)(1): “Qualified individual,” for purposes of section 911, means an individual whose tax home is in a foreign country and who is –

(A) a citizen of the United States and establishes to the satisfaction of the Secretary that he has been a bona fide resident of a foreign country or countries for an uninterrupted period which includes an entire taxable year,


(B) a citizen or resident of the United States and who, during any period of 12 consecutive months, is present in a foreign country or countries during at least 330 full days in such period.

From federal tax regulation 1.911-2(h):  Foreign country. The term “foreign country” when used in a geographical sense includes any territory under the sovereignty of a government other than that of the United States. It includes the territorial waters of the foreign country determined in accordance with the laws of the United States), the air space over the foreign country, and the seabed and subsoil of those submarine areas which are adjacent to the territorial waters of the foreign country and over which the foreign country has exclusive rights, in accordance with international law, with respect to the exploration and exploitation of natural resources.


The internal revenue code does not define “foreign country.” It’s not clear whether the definition of “foreign country” under Regulation 1.911 includes Antarctica because Antarctica is not under the sovereignty of any government.


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✓Right answer!

For the IRS.

Antarctica is not a foreign country for purposes of the Code. Taxpayer is not entitled to exclude wage income earned in Antarctica.