126 T.C. No. 5

UNITED STATES TAX COURT

DAVE ARNETT, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 8866-03. Filed January 25, 2006.

P is a U.S. citizen who earned wage income while

working in Antarctica. P excluded this wage income on

his 2001 Federal income tax return. R issued a notice

of deficiency in which R determined that the excluded

wage income earned in Antarctica is taxable.

Held: The wage income P earned in Antarctica is

not excludable from income under sec. 911, I.R.C.

Larry D. Harvey, for petitioner.

Randall L. Preheim, for respondent.
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1 Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the year in issue, and

all Rule references are to the Tax Court Rules of Practice and

Procedure.

2 Respondent conceded that no penalty pursuant to sec. 6662

is due from petitioner for 2001.

OPINION

VASQUEZ, Judge: Respondent determined an $8,066 deficiency

in petitioner’s 2001 Federal income tax and a $1,613.20 section

66621 penalty. After a concession,2 the sole issue for decision

is whether section 911 entitles petitioner to exclude from gross

income the wage income he earned in Antarctica in 2001. 

This case is before the Court on respondent’s motion for

summary judgment and petitioner’s motion for partial summary

judgment under Rule 121. This is the lead case in an

unconsolidated group of approximately 150 cases of similarly

situated taxpayers who earned wage income in Antarctica and who

make similar arguments.

Background

At the time of the filing of the petition, petitioner

resided in Hayward, Wisconsin. During 2001, petitioner was

employed by Raytheon Support Services Co. (Raytheon). Raytheon

is under contract with the National Science Foundation (NSF), an

agency of the United States, for certain research conducted in

Antarctica. During 2001, petitioner, a U.S. citizen, resided and

performed services at McMurdo Station in Ross Island, Antarctica. 
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On his 2001 Federal income tax return, petitioner excluded

$48,894 of wage income earned and received as an employee of

Raytheon for services performed in Antarctica during tax year

2001. 

In the notice of deficiency, respondent determined that the

income petitioner earned in Antarctica is taxable and is not

excludable under section 911. 

Discussion

I. Summary Judgment

Respondent moved for summary judgment on the issue of

whether section 911 entitles petitioner to exclude from U.S.

taxation $48,894 of wage income earned and received as an

employee of Raytheon for services performed in Antarctica during

tax year 2001. 

Petitioner moved for partial summary judgment on the issue

of whether the income he earned in Antarctica is foreign earned

income within the meaning of section 911. Petitioner contends

that the income he earned in Antarctica “was not earned from

sources within the United States” and that he should be entitled

to the foreign earned income exclusion under section 911. 

Petitioner’s motion is for partial summary judgment because even

if the Court finds for petitioner that the income he earned in

Antarctica is foreign earned income, petitioner must still prove

that he otherwise meets the requirements of section 911. 
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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

and that the 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. Gross Income in General

Section 61(a) provides that gross income means all income

from whatever source derived. Thus, citizens of the United

States generally are taxed on income earned outside the United

States unless the income is specifically excluded. 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

Section 911(a) provides in part that a "qualified

individual" may elect to exclude from gross income his or her
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“foreign earned income”. Section 911(b)(2) limits the amount of

the exclusion for foreign earned income to $78,000 for 2001.

Section 911(b)(1)(A) defines “foreign earned income” to

mean, 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). 

Section 911(b)(1)(B) excludes from foreign earned income certain

amounts not relevant to this case.

Section 911(d)(1) defines “qualified individual” for

purposes of section 911 to mean:

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, or

(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. 

Section 911(d)(9) authorizes the Secretary to prescribe

“regulations as may be necessary or appropriate to carry out the

purposes of” section 911. Pursuant to that grant of authority,

the Secretary promulgated proposed regulations under section 911

in 1983, see 48 Fed. Reg. 33007 (July 20, 1983), and final 
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regulations in 1985, see T.D. 8006, 1985-1 C.B. 224, that apply

to the year in issue. 

These regulations are legislative; therefore, they are

entitled to Chevron deference and are binding on the courts

unless procedurally defective, arbitrary or capricious in

substance, or manifestly contrary to the statute. United States

v. Mead Corp., 533 U.S. 218, 227 (2001); Chevron U.S.A. Inc. v.

Natural Res. Def. Council, Inc., 467 U.S. 837 (1984); Specking v.

Commissioner, supra at 115. 

The Internal Revenue Code (Code) does not define “foreign

country” for purposes of section 911. However, section 1.911-

2(h), Income Tax Regs., provides:

(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. 

[Emphasis added.]

The parties disagree regarding whether this definition of

“foreign country” includes Antarctica. If Antarctica is a

“foreign country” for purposes of section 911, petitioner may be

able to exclude from income the wage income he earned in
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Antarctica. If Antarctica is not a “foreign country” for

purposes of section 911, petitioner must include in income the

wage income he earned in Antarctica.

IV. Caselaw

In Martin v. Commissioner, 50 T.C. 59 (1968), we decided a

similar issue--whether a U.S. citizen can exclude income earned

in Antarctica. We held that Antarctica is not a foreign country

within the meaning of section 911(a)(2) and section 1.911-

1(b)(7), Income Tax Regs., as in effect in 1962.

In Martin, the taxpayer, as an employee of a private taxexempt U.S. organization, took part in an Antarctic expedition. 

The taxpayer claimed, as does petitioner, that his earnings in

Antarctica were exempt from tax under section 911, and the only

question raised in this respect in Martin was whether Antarctica

is a foreign country. 

In finding that Antarctica is not a foreign country within

the meaning of section 911(a)(2), we relied on a treaty effective

June 23, 1961, between the United States and a number of other

nations regarding Antarctica. The Antarctic Treaty, Dec. 1,

1959, 12 U.S.T. 794. The treaty provides that Antarctica is to

be used for peaceful purposes, that scientific investigation

there is to be encouraged, and that all questions of sovereignty

over it are to be put in abeyance.
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3 The treaty was in force as of Jan. 1, 2005. Treaties in

Force, http://www.state.gov/documents/organization/53776.pdf.

We also relied on the language of section 1.911-1(b)(7),

Income Tax Regs., as in effect at the time, which defined

“foreign country” as follows: “The term ‘foreign country’ means

territory under the sovereignty of a government other than that

of the United States and includes the air space over such

territory. It does not include a possession or Territory of the

United States.”

We noted that in the light of the international treaty

concerning Antarctica, the U.S. Department of State did not

consider Antarctica to be under the sovereignty of any

government. Therefore we held that Antarctica was not a foreign

country within the meaning of the regulations or of section 911

as then in effect. Martin v. Commissioner, supra at 62; see also

Rev. Rul. 67-52, 1967-1 C.B. 186. 

The treaty regarding Antarctica is still in effect, and

therefore Antarctica remains a sovereignless region.3 Petitioner

nevertheless contends that Martin has been overruled and

superseded by the holding of the Supreme Court of the United

States in Smith v. United States, 507 U.S. 197 (1993), and the

holding of the U.S. District Court for the District of

Massachusetts in Smith v. Raytheon Co., 297 F. Supp. 2d 399 (D.

Mass. 2004). 
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In Smith v. United States, supra at 198, the issue was

“whether the Federal Tort Claims Act (FTCA), 28 U.S.C. §§

1346(b), 1402(b), 2401(b), 2671-2680 (1998 ed. and Supp. II),

applies to tortious acts or omissions occurring in Antarctica, a

sovereignless region without civil tort law of its own.” The

plaintiff, Mrs. Smith, brought a wrongful-death action against

the United States under the FTCA for the death of her husband,

Mr. Smith. At the time of his death, Mr. Smith was employed as a

carpenter at McMurdo Station on Ross Island, Antarctica, for a

construction company under contract to the NSF, the same agency

that had a contract with Raytheon in the instant case. Mr. Smith

died after falling into a crevasse in Antarctica. 

The Supreme Court held that Antarctica is a foreign country

for purposes of the FTCA. Id. at 201-202. The Supreme Court

reasoned that Mrs. Smith’s claim was barred by the foreigncountry exception of the FTCA under 28 U.S.C. sec. 2680(k), which

precludes the exercise of jurisdiction over “any claim arising in

a foreign country.” The Court based its conclusion on the

particular language of the FTCA. Id. at 201-205. 

In Smith v. Raytheon Co., supra, the U.S. District Court for

the District of Massachusetts held that Antarctica is a foreign

country for purposes of the Fair Labor Standards Act (FLSA). The

plaintiffs claimed that the FLSA required their employer,

Raytheon, which had entered into a contract with the NSF to
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perform services in Antarctica, to pay them overtime for work

they performed in Antarctica. Id. at 400. The FLSA requires an

employer to pay an employee “at a rate not less than one and onehalf times the regular rate at which he is employed” for the

hours the employee works in excess of 40 hours per week. 29

U.S.C. sec. 207(a). However, there are several exceptions to

this rule including geographical limits. Certain provisions of

the FLSA, including section 207, do not apply where employee

services are performed within a foreign country. 29 U.S.C. sec.

213(f). The court concluded that Antarctica is a foreign country

for purposes of the FLSA and based its conclusion on the

particular language of the FLSA. Smith v. Raytheon Co., supra at

401-402.

In the instant case, we are revisiting the same issue we

discussed in Martin v. Commissioner, supra. Although the

statutory and regulatory provisions discussed in Martin have been

modified and there have been caselaw developments since Martin,

these changes do not affect the conclusion that petitioner’s

income earned in Antarctica is subject to tax in the United

States and petitioner does not qualify for the foreign earned

income exclusion under section 911. 

Moreover, both Smith v. United States, supra, and Smith v.

Raytheon Co., supra, discuss the issue of whether Antarctica is a

foreign country within the context of statutes other than the
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Code. The provisions of the Code and the applicable regulations

are controlling herein. Therefore, we do not find Smith and

Raytheon Co. to be controlling, and we will not overrule our

holding in Martin that Antarctica is not a foreign country for

purposes of the Code.

V. Conclusion

The foreign earned income exclusion of section 911 applies

to amounts received “from sources within a foreign country or

countries”. As Antarctica is not a foreign country for purposes

of the Code, we conclude that petitioner is not entitled to

exclude the wage income he earned in Antarctica from income for

2001 pursuant to section 911. See also sec. 863(d) (providing

that income earned in Antarctica by a U.S. person is sourced in

the United States).

In reaching all of our holdings herein, we have considered

all arguments made by the parties, and, to the extent not herein

discussed, we find them to be irrelevant or without merit.

To reflect the foregoing,

An appropriate order and

decision will be entered granting

respondent’s motion for summary

judgment and denying petitioner’s

motion for partial summary

judgment.