T.C. M em o . 2 0 2 0 -1 5 8

UNITED STATES TAX COURT

D OUGLAS H. CUTTING, Pet i t i o n er v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 1 5 3 70 -1 7
. Fi l edNo vem b er 1 9 , 2 02 0
.

Ro b ertL. Go l d s t ei n an dFramt a Saech ao , fo r p et i t i o n er. Dan i el J . Bry an t , fo r res p o nd en t
.

M EM ORANDUM FINDINGS OF FACT AND OPINION PUGH, Ju d g e: Res p on d en td et erm i n ed t h e fo ll o wi n g i n co m e t ax d efi ci en ci es an dp en al t i es i n a n o t i ce o f d efi ci en cy i s su edt o p et i t i o n er o n M ay 1 8 , 2 0 1 7 : 1

1 Un l es s o t h erwi s e i n d i cat ed , s ect i on referen ces are t o the In t ern al Rev en u e (co n ti n u ed ...)- 2
-

Year Defi ci en cy Pen al t y s ec. 6 66 2 (a) 2 0 1 2 $ 2 0,8 3 8 $ 4 ,1 6 8 2 0 1 3 2 2 ,1 0 5 4 ,4 2 1 2 0 1 4 2 5 ,5 6 7 5 ,1 1 3 Aft er res p o n d en t ’ s co n ces s i o n th atp et it i o n er i s n o tl i ab l e fo r an y o f t h e p en al t i es , th e rem ai ni n g i s s u es fo r d eci s i o n are wh ether p et i t io n er (1 ) was en t i t l ed t o the s ect i o n 9 1 1 fo rei g n earn edi n co m e ex cl us i o n fo r t he y ears i n i s s ue an d (2 ) recei v edan dfai l edt o rep o rtCal i fo rn i a St at e i n co m e t ax refu n d s as g ro s s i n co m e fo r t h e y ears i n i s s u e. FINDINGS OF FACT So m e o f t h e fact s h av e b een s ti p u lat ed an dare s o fo u n d. Th e s t ip u l at ed fact s are i n co rp o rat edi n o u r fi nd i n g s b y th i s referen ce. Pet i t i o ner res i dedi n No n g p ru e Ban g l am u n g , Ch o nbu ri 2 0 1 5 0 , Th ai l an d , wh en h e t i m el y

fi ledh is p et i t i o n . He was a U.S. ci t i zen at al l rel ev an tt i m es . Beg i n n in g i n 2 0 0 5 an dco n t i n u i n g th ro ug h the y ears i n i s s ue p et i t i o n er
wo rk edas a p i l o tfo r Om n i Ai r In t ern at i o nal (OAI), a d o m es t i c co m p an y [* 2 ]

1 (...co n t in u ed ) Co d e o f 1 9 8 6 , as am en d ed , i n effect atal l rel ev an tt i m es . Ru l e referen ces are t o t h e Tax Co u rt Ru l es o f Pract ice an dPro cedu re, an dm o n et ary am o u n ts are ro u n d ed t o the n eares td ol lar.- 3
-

[* 3 ] h ead qu art ered i n Tu l s a, Ok l ah o m a. OAI h ada co n t ract wi t h t h e U.S. Dep art m en to f Defen s e. Pet i t i on er fl ew m o s t ly i n tern at i o n al ro u t es b u tal so s o m e d o m es t ic ro u t es . He p ri m ari l y t ran s p o rt edm i l i t ary p ers o n n el an dcarg o . Du ri n g th e s am e y ear p et i t i o n er b eg an wo rk in g fo r OAI h e m arri eda
wo m an wh o res i d edi n Th ai l an d . Wh i l e wo rk i n g fo r OAI du ri n g th e y ears i n i s s u e h e s p en tm o s to f h i s d ay s o ff i n Th ai l an dwi t h h is wi fe an ds t ep d au g h ter. Pet i t io n er d i dn o tb eco m e a Th ai ci t i zen o r o b t ai n a p erm an en tv i s a t o res i d e i n Th ai l an d . He v i s i t edTh ai l an do n a t em po rarytran s i tan dn o ni m

m i g ran tv i s a t h at
was g ran tedau t o m at i cal ly each t i m e h e en t ered Th ai l an d an dex p i redaft er 3 0 d ay s . He was ab l e t o ren ew h i s t em po rarytran s itan dn o ni m

m i g ran t v i s as s i m

p l y b y l eav i n g Th ai l an dt o wo rkas a p i l o to n a reg ul ar b as i s, g i v i n g h i m a fres h 3 0 -d ay p eri o deach t i m e h e ret urn ed . Onatl eas t t wo o ccas io n s du ri n g t h e y ears i n i s su e p et i t i o n er req ues tedthath i s t em p o rary t ran s i t an d n o n i m

m i g ran tv is as b e
ex t en d ed . Bu to n each o ccas i o n h i s req u es t was d en i edb y th e Th ai Go v ern m en t
. Becau s e h e h el do n l y

t em p o rarytran s i tan d n o n i m

m i gran tv i s as , p et i t i o n er
co u ldn o tl awfu l l y

o wno r l eas e an y

real p ro p ert y

o r wo rki n Th ai l an d. Th erefo re, wh i le h e s i gn edh is wi fe’ s l eas e as a wi t nes s , h e was n o tl is tedo n i tas a t en an t
. Pet i t io n er d i dn o tp ay an y t ax es t o Th ai l an d
.- 4
-

[* 4 ] Du ri n g th e y ears i n i ss u e p et i t i o n er’ s wag es were d ep o s i t ed i n t o h i s b an k
acco u n t atth e Go l d en On e Cred i tUn i o n, h ead qu art ered i n Cal i fo rn i a. Wh en h e t rav el ed fro m

th e Un i t edSt at es t o Th ai l an d , h e t y p i cal l y wo u l d b ri n g s ev eral t h o u s an d d o l l ars t o ex ch an ge i n t o Th ai cu rren cy o n ce h e arri v ed
. Pet i t i o ner’ s em

p l o ym en twi t h OAI was g o v ern edb y a co l l ect i v e b arg ai n i ng ag reem en t(CBA) b et ween OAI an dth e In tern at i o n al Bro t h erh o o do f Team s t ers . Wh i l e OAI d i dn ot req u i re t h atp et i t i o n er l iv e i n th e Un it ed St at es , th e CBA req u i redh i m

t o h av e a “ h o m e b as e” (a “ p ri m ary res id en ce as l i s t edo n Co m p an y p ers o n n el an d b en efi treco rd s ”) an dt o d es i g n at e a g at eway trav el ai rp o rti n th e
co n ti g u o us Un it edSt at es . Pet it i o n er ch o s e San J o s e, Cal i fo rn i a, t o b e h i s h o m e b as e, an dd es i g nat edSan J o s e Ai rp o rt(SJ C) as h is g at eway trav el ai rp o rt
. Pet i t io n er ch o se San J o s e b ecau s e h is p aren t s an db ro th er l i v edi n th e area. Pet i t io n er l i s t edh i s fat h er’ s ad dres s i n Cam p b el l , Cal ifo rn i a, as h is m ai l i n g ad dres s . He d idn o t o wno r l eas e a res id en ce i n th e Un i t edSt at es du ri n g t h e y ears i n i ss u e. Pet i t i o n er’ s cred i t card s t at em en t s s h o w th at , du ri n g t h e y ears i n i s s u e, h e
s h o p pedfo r g ro ceri es s ev eral t i m es i n Cam p b el l , p ai dfo r h ai rcu t s s ev eral t i m es i n
n earb y Lo s Gat o s , Cal i fo rn ia, an dwen tt o th e ey e d o ct o r an dp u rch as edco rrect i v e l en s es i n San J o s e.- 5
-

[* 5 ] Un d er th e CBA, OAI was res p o n s i b l e fo r p ro vi d in g “ d ead h ead ” trav el fo r p et i t i o n er fro m

SJ C “ t o a d o m es t i c * * * du t y as s ig n m en t o r t o a d om es t i c ai rp o rt
o f d ep artu re fo r an i n t ern at i o nal as s i g n m en t ” an d“ fro m th e d o m es t ic ai rp ortwh ere t h e du ty p eri o d en d s t o * * * [SJ C] .” 2 Pet i ti o n er was res p o ns i b l e fo r g et t i n g t o SJ C t o s t arth i s du t y

as s ig n m en t s an dfo r ret u rn i n g fro m SJ C t o wh erev er h e wi s h edt o s p en d p ers on al t i m e wh en h e was fi n i s h ed
. Th e CBA req u i redp et i t i o n er t o h av e a cert ai n am o u nto f t rai n i n g p er y ear. Al l o f t he t rai n i n g was d o n e i n th e Un i t edSt at es . Pet it i o n er al so s p en tt i m e each y ear o n “ res erv e” fo r wo rk . Duri n g “ s h o rtcal l res erv e” h e h adtwo h o u rs t o rep o rt fo r du t y i f cal l ed . Duri n g “ l o n g cal l res erv e” p et i t i o n er h adatl eas t 1 2 h o u rs t o rep o rtfo r du t y . Pet i t i o ner’ s p ri m ary

dut y was as a p i l o t , an dh i s p ri m ary i n co m e was earn ed du ri n g fl i g h t s wh i ch h e was p i l o t i n g . He al s o was p ai d(ata l o wer rat e) fo r t i m e
s p en t o n s h o rtcal l res erv e, t rai n i n g , d ead h eadtrav el , v acat i on d ay s , an d s ickd ay s . In ad d it i o n h e was pai dan h o u rl y p er d iem wh i le b et ween fl i g h t s an ds t i l l o n du t y . Pet i t io n er was n o tp ai dwh i l e o ff du t y o r duri n g l o n g cal l res erv e.

2 Dead h ead t rav el i s “ t h e m o v em en to f * * * [p et i t i o ner] fro m o n e rep o rt i n g p o i n tt o an o t h er atth e d irect i o n o f t h e Co m p an y wh i l e * * * [p et it i on er] i s n o t i n v o l v ed i n th e o p erat i o n o f anai rcraft
. ”- 6
-

[* 6 ] Fl i g ht s were as s i gn edi n o n e- t o two -m o nt h i n crem en t s th ro ug h a b i d d i n g
s y s t em . On ce fl ig h t s were as s i g n ed , p et it i on er kn ew h i s s ch edu l e fo r t h e en t i re
o n e t o two m o n th s , i n cl u d i n g fl i g h t s , trai n in g , d ay s o ff, v acat i o n d ay s , l o ng cal l
res erv e, an ds h o rtcal l res erv e. 2 0 1 2 In 2 0 1 2 p et i t i o n er s p en t1 5 3 d ay s i n Th ai l an d
. He s p en t4 4 d ay s i n trai n i n g i n the Un i t edSt at es . He wo rk edas a p i l o tfo r 4 8 fl i gh t s: 4 2 i n t ern at i o nal an d 6 d om es t i c. Pet i t io n er h ad6 0 d ead h eadfl i g ht s : 2 6 i nt ern at io n al fl i g h ts an d 3 4 d o m es t i c fl ig h t s . He h ad1 7 i n t ern at i o n al p er d i em d ay s . 2 0 1 3 In 2 0 1 3 p et i t i o n er s p en t1 7 1 d ay s i n Th ai l an d
. He s p en t1 5 d ay s i n trai n i n g i n the Un i t edSt at es . He wo rk edas a p i l o tfo r 6 0 fl i gh t s: 5 9 i n t ern at i o nal an d 1 d om es t i c. Pet i t io n er h ad7 6 d ead h eadfl i g ht s : 3 9 i nt ern at io n al an d 3 7 d o m es t i c. He h ad1 5 i n tern at i o n al p er d i em d ay s . 2 0 1 4 In 2 0 1 4 p et i t i o n er s p en t1 1 4 d ay s i n Th ai l an d
. He s p en t1 4 d ay s i n trai n i n g i n the Un i t edSt at es . He wo rk edas a p i l o tfo r 8 4 fl i gh t s: 7 4 i n t ern at i o nal an d 1 0 d o m es t i c. Pet it i o n er h ad1 06 d ead h ead fl i g h t s : 7 1 i n tern at i on al an d 3 5 d o m es t i c. He h ad2 4 i nt ern at i o n al p er d iem d ay s an d6 d o m es t i c p er d i em d ay s .- 7
-

[* 7 ] Th u s , duri n g each y ear p et i ti o n er s p en tt i m e i n the Un i t edSt at es trai n i n g
an d h adfl i gh tp at t ern s th atb eg an o r en dedi n t h e Un i t edSt at es , i ncl u d i n g d ead head fl i gh t s --wh ere h e was m o vi n g fro m o n e du t y s t at i o n t o an o t h er--at d o m es t ic ai rp o rt s . Ad d i t i o nal l y , acco rd i n g t o p et i t i o ner’ s fl i g h treco rd s , o n s ev eral
o ccas i o n s OAI fl ew h i m

t o o r fro m

h i s h o m e b as e o f San J o s e. Ons o m e o f t h es e
o ccas i o n s OAI fl ew p et i t i on er t o San J o s e atth e en do f an as s i g nm en tan d fro m San J os e t o th e s t arto f h i s n ex tas s i g n m en t
. Fo r i n st an ce, OAI fl ew p et i t i on er i n t o SJ C o n Ap ri l 3 0 , 2 01 2 , an dfl ew p et i t i o n er o ut o f SJ C o n M ay 2 1, 2 0 1 2 , an dh e
was o ff du t y

du ri n g th e en t i re t i m e i n b et ween . Pet i t i o ner t i m el y

fi l edFo rm s 1 0 4 0 , U.S. In di vi dual In co m e Tax Retu rn , fo r 2 0 1 2 , 2 0 1 3 , an d 2 0 1 4 l i s t i n g h i s fi l i n g s t atus as “ s i n g l e” fo r each y ear an dl i s t i n g h i s fat her’ s Cam

p b el l, Cal i fo rn i a, ad dres s . OAI wi t h h el d Fed eral an dCal i fo rn i a St at e i nco m e, So ci al Secu ri t y , an dM ed i care t ax es fro m p et i t i o n er’ s wag es fo r t h e y ears i n i s s u e. He rep ort ed wag es o f $ 1 0 9 ,8 50 , $ 11 3 ,8 7 2 , an d$ 1 3 6 , 1 9 4 fo r 2 0 1 2 , 2 0 1 3 , an d2 0 1 4 , res p ect i v el y . He d edu ct ed St at e t ax o f $ 7 ,0 5 3, $ 7 ,3 5 5 , an d $ 8 ,7 2 0 fo r 2 01 2 , 2 0 1 3, an d2 01 4 , res p ect i vel y . Pet i t i o n er recei v edb utfai l edt o rep o rtCal i fo rn i a St at e t ax refu n d s o f $ 7 , 5 8 5, $ 6 ,0 5 6 , an d$ 6 ,3 82 fo r 2 0 1 2 , 2 0 1 3 , an d 2 0 1 4 , res p ect iv el y .- 8
-

[* 8 ] Pet i t i o ner at t ach edFo rm s 2 5 5 5 , Fo rei g n Earn ed In co m e, t o h i s Fo rm s 1 0 4 0 fo r t h e y ears i n i s su e. He rep o rt edh i s en t ire s al ary fro m OAI as fo rei g n earn ed i n co m e an d cl ai m edth e m ax im u m fo rei g n earn edi n co m e ex cl u s i o n al l o wedfo r each y ear: $ 9 5 ,1 0 0 , $ 9 7 ,6 0 0 , an d$ 9 9 , 2 00 fo r 2 0 1 2 , 2 0 1 3 , an d 2 0 1 4 , res p ect i v el y . Pet i t io n er ch eck ed“No ” o n Fo rm s 2 5 5 5 , l i n e 1 2 a, wh i ch as ks : “ Di d an y o f y o u r fam i l y l i v e wi t h y ouab ro addu ri n g an y p arto f t h e t ax y ear? ” He ch eck ed“ Yes ”
o n l i n e 1 3 a, wh i ch as k s : “ Hav e y o us ub m i t t eda s t at em en t t o t h e au t h o ri t i es o f t h e fo rei gn co u n t ry wh ere y oucl ai m b o na fi d e res i d en ce t h aty o u are n o ta res i d en to f t h atco u n t ry ? ” He al s o ch eck ed“ Yes ” o n l i n e 1 3 b , wh i ch as k s : “ Are y o ureq u i red t o p ay i n co m e t ax t o th e co un t ry wh ere y o ucl ai m

b o n a fi d e res i den ce? ” Fi n al l y , h e ch eck ed“No ” o n l i n e 1 5c, wh i ch as k s : “ Di dy ou r v i s a l i m i tth e l en g t h o f y o u r
s t ay or em

p l oym en ti n a fo rei g n co u n t ry ? ” Onh i s Fo rm s 2 5 5 5 p et i ti o n er d i dn o t p ro v id e an y

i n fo rm at i o n i n PartIII, Tax p ay ers Qu al i fy in g Un der Ph y s i cal Pres en ce Tes t. In th e n ot ice o f d efi ci en cy res p o nd en t d i s al lo wed p et i t io n er’ s fo rei g n earn ed i n co m e ex cl u s i o n i n i t s en t i ret y fo r each y ear i n i s s ue o n acco u n to f h i s fai l u re t o
es t ab l i s h ei t h er b o n a fi d e res id en ce o r p h y s ical p res en ce i n a fo rei g n co u n t ry fo r t h e rel ev an tp eri o d
.- 9
-

[* 9 ] OPINION Th e t ax p ay er g en eral l y

h as th e b u rd en o f p ro v i n g t h atth e Co m m i s s i o n er’ s d et erm i n at i o n s i n a n o t i ce o f d efi ci en cy are i n co rrect
. Ru l e 1 4 2 (a); W el ch v . Hel v eri n g , 2 9 0 U.S. 1 1 1 , 1 15 (1 9 33 ). Th e b u rd en o f p ro o f m ay s hi ft fro m th e t ax p ay er t o th e Co m

m i s s i o n er i n cert ai n ci rcu m s t an ces u n d er s ect io n 7 4 9 1 (a). Pet i t io n er h as n otcl ai m edo r s h o wn th ath e m eet s th e req u i rem en t s o f s ect i o n 7 4 9 1 (a) t o s h i ftth e b u rd en o f p ro of t o res p o n den tas t o an y rel ev an tfact ual i s s u e. I. Fo rei g n Earn edIn co m e Ex cl u s i o n W e fi rs tad dres s res p o nd en t ’ s d et erm i nat i on s thatp et i t i o n er d i d n o t qu al i fy fo r t h e fo rei g n earn edi n co m e ex cl u s i o n fo r 2 01 2 , 2 0 1 3 , o r 2 0 14 u n d er s ect i o n 9 1 1 . Un it ed St at es ci t i zen s are s ub jectt o Fed eral i n co m e t ax o n th ei r wo rl dwi d e i n co m e. Co o kv . Tai t , 2 6 5 U.S. 4 7, 5 6 (1 92 4 ); Hu ff v . Co m m i s s i o n er, 1 3 5 T.C. 2 2 2 , 2 3 0 (2 0 1 0). Sect io n 6 1(a) p ro v i d es th e fo l l o wi n g b ro add efi n i t i o n o f t h e t erm

“ g ro s s i n co m e”: “ al l i n co m e fro m wh at ev er s o urce d eri v ed ” ex cep tas o th erwi s e p ro v id ed . Sect i o n 9 1 1 (a) al l o ws a “ qu al i fi edi n d i v i du al ” t o ex cl ud e fro m g ro s s i n co m e “ fo rei g n earn edi n co m e”. Fo rei g n earn edi n co m e i s “ t h e am o u n trecei v ed b y s u ch i n d i v i du al fro m

s o u rces wi t h i n a fo rei g n co u n t ry o r co u n t ri es wh i ch
co n st i tu t e earn edi n co m e at t ri b u t ab le t o s erv i ces p erfo rm edb y s uch i n d i v i du al ”. Sec. 9 1 1(b )(1 )(A). A qu al i fi edi n di v i du al i s d efi n ed , i n rel ev an tp art , as “ an- 1 0 -

[* 1 0 ] i n d i v i du al wh o s e t ax h om e i s i n a fo rei g n co u n t ry an d wh o i s ” ei t h er “ a b o na fi de res i d en to f * * * [t h atco u n t ry ] fo r an u n i n terru p t edp eri odwh ich i n cl u d es
* * * [t h e] en t i re t ax ab l e y ear,” o r p h y s i cal l y “pres en ti n a fo rei g n co u n t ry o r
co u nt ri es ” fo r a cert ai n p eri o d. Id . s ub s ec. (d )(1 ). A. Tax Ho m e W e fi rs ttu rn t o wh et h er p et i t i o n er h ada t ax h o m e i n Th ai l an d
. An i n d i v i du al ’ s t ax h o m e m ean s t h e i n d i v i du al ’ s t ax h o m e fo r p u rp os es o f s ect i o n 1 6 2 (a)(2 ) (rel at i n g t o trav el in g ex p en s es wh i l e awayfro m h o m e). See s ec. 9 1 1 (d )(3 ). “ Th u s , u nd er s ect i o n 9 1 1 , an i n d i v i du al ’ s t ax h o m e i s co n s i d ered t o b e l o cat edath i s reg u l ar o r p ri n ci pal (i f m ore t h an o n e reg u l ar) p l ace o f b u s i nes s o r, i f t h e i n d i v i du al h as n o reg u l ar o r p ri n ci p al p l ace o f b u s i nes s b ecau s e o f t h e n atu re
o f t h e b u s i n es s , th en ath i s reg ul ar p l ace o f ab o d e i n a real an ds ub s t an t i al s en s e.” Sec. 1 .9 1 1 -2 (b ), In co m e Tax Reg s . Pet i t i o ner arg u es th atb ecau s e h e was a p i l o tfl y i n g i n t ern at io n al ro u t es al l
o v er t h e wo rl d , h e h ad n o reg u l ar o r p ri n ci pal p l ace o f b u si nes s , an dh en ce, h i s t ax h o m e s h o u l d b e d et erm i n edb y referen ce t o h i s reg u l ar p l ace o f ab o d e, wh i ch h e arg u es i s i n Th ai l an d
. W e h av e reject edth is arg u m en ti n th e p as t , h o l d i ng th atth e p ri n ci p al p l ace o f b u s i n es s fo r a p i l o to r s i m i lar p ro fes s i o n al i s h i s du t y s tat i o n . See, e.g
. , W o

jci ech o ws k i v . Co m

m i s s i on er, T.C. M em o . 1 9 9 1 -2 3 9 (h o ld i n g t h ata- 1 1 -

[* 1 1 ] fl i g h ten g in eer’ s p ri n ci p al p l ace o f b u s i n es s was h i s b as e s tat i o n , J o h n F. Ken ned y In t ern at i o n al Ai rp o rt (J FK), an dth u s h i s t ax h o m e was i n th e New Yo rk Ci t y v i ci ni t y ), aff’ dp er o rd er, 1 9 9 3 W L 3 1 5 14 (D.C. Ci r. 1 99 3 ); Si sl i k v
. Co m m i s s i o n er, T.C. M em o . 1 9 8 9 -4 9 5 (h o l d in g th ata p i lo t ’ s p ri n ci p al p l ace o f b u s i n es s was h i s b as e s t at i o n , J FK ai rp o rt , an dth u s h i s t ax h om e was i n th e New Yo rkCi t y

v ici n i t y ), aff’ dp er o rd er, 1 99 2 W L 1 1 76 9 3 (D.C. Ci r. 1 9 9 2); Swi ceg oo dv . Co m

m is s i o n er, T.C. M em o . 1 9 8 9 -4 6 7 (ci t i n g Fo l km an v . Un i t ed St at es , 6 1 5 F.2 d4 9 3 , 4 9 6 (9 t h Ci r. 1 9 8 0 ) (h o l d i n g th e t ax h o m e fo r ai rl i ne p i l o t s h av in g du al em

p l o y ers an d p l aces o f em

p l oym en tt o b e t h e ci t y

o f t he ai rl in e’ s du t y b as e)) (h o l d in g t hata p i l o t ’ s p ri nci p al p lace o f b u s i n es s was h i s b as e s t at i o n -- J FK--an dth u s h i s t ax h o m e was i n th e New Yo rkCi t y v i ci n i t y ). Pet i t i o ner s el ect edSan J o s e t o b e h is h o m e b as e an dd es i g n at edSJ C as h i s g at eway trav el ai rp o rt . Th o s e s el ect i o n s cam e wi th s ub s t an t i v e ri g h t s an d
o b l i g at i o ns u n d er t he t erm s o f t h e CBA. Sp eci fi cal l y , OAI was o bl ig at edt o p ro v id e p et i t i o n er t ran sp o rtt o an dfro m SJ C atth e b eg i n n i n g o r en do f a du t y
as s i g n m en t
. Pet i t i o ner’ s em

p l o ym en tarran g em en twi t h OAI was s i m i l ar t o t h e
em pl o y m en tarran g em en t s i n Si s l i kan dSwi ceg o od . Ineach cas e a Un i t edSt at es ci t i zen p i l o tfl ew i n t ern at i o nal ro u t es , d es i g n at edh i s h om e b as e ata d o m es t i c- 1 2 -

[* 1 2 ] ai rp o rt(J FK), an d ch o se t o l i v e ab ro adfo r p ers o n al reas on s . Si s l i kv . Co m m i s s i o n er, T.C. M em o . 1 9 8 9 -4 9 5 ; Swi ceg o odv . Co m m i s s i o n er, T.C. M em o . 1 9 8 9 -4 6 7 . Des p i t e t h e fact t h ateach p i l otd i dn o tactu al l y al way s b eg i n o r en da fl ig h t p at t ern atJ FK, we s t il l h el dth atth e h o m e b as e as s i g nm en twas th e p ri n ci pal p l ace o f b u s i nes s fo r each p i l o t . Si s l i k v . Co m m i s s io n er, T.C. M em o . 1 9 89 -4 9 5 ; Swi ceg oo dv . Co m

m is s i o n er, T.C. M em o . 1 9 8 9 -4 6 7 . Hen ce, each p i l o t’ s t ax h o m e was th e New Yo rkCi t y area, n o tth e fo rei g n co u nt ry i n wh i ch each ch o s e t o
s p en d p ers o nal t im e. Si s l ikv . Co m m is s io n er, T.C. M em o . 1 98 9 -4 9 5 ; Swi ceg o o d
v . Co m m i s s i o n er, T.C. M em o . 1 9 8 9 -4 6 7
. Li k ewi s e, we h o l dth atp et i t i o n er’ s p ri n ci pal p l ace o f b u s i n es s , an dth u s h i s t ax h o m e, was i n San J o s e, h i s h o m e b as e an d t h e l o cat i o n o f h i s g at eway trav el ai rp o rt , SJ C. See s ec. 1 .9 11 -2 (b ), In co m e Tax Reg s . Acco rd i n g l y , p et i t i o n er i s
n o ta qual i fi edi n d i v idual an di s n o ten t i tl edt o ex cl u de an y i n co m e u n d er s ect i on 9 1 1 . See s ec. 9 1 1 (a), (d ). B. Bo n a Fi de Res i den t Hav i n g d et erm i nedthatp et i t i o n er’ s t ax h o m e was n o ti n a fo rei gn co u n t ry , we n eedn o tap p l y

th e b o n a fi d e res i d en ce o r p h y si cal p res en ce t es t t o d et erm i n e t h atp et i t i o n er was n ota qu al i fi edi n d i v i dual . See s ec. 9 1 1 (d )(1 ). No n et hel es s , we- 1 3 -

[* 1 3 ] wi ll ad dres s p et i t i on er’ s arg u m en tth ath e was a b o n a fi d e res i d en to f Th ai l an ddu ri n g each y ear i n i s s u e. Bo n a fi d e res i den ce i s “p ri m ari l y a qu es ti o n o f fact , an di ti s, th erefo re, d i ffi cu l tt o reco nci l e t h e m an y cas es i n the area.” Li n d e v . Co m m i s s i o ner, T.C. M em o. 2 0 1 7 -1 8 0 , at * 2 0 (quo t i n g Daws o n v . Co m m i s s i o n er, 5 9 T.C. 2 6 4 , 2 6 8 (1 9 7 2)); cf., e.g ., Co m

m i s s i o n er v . Es t at e o f San d ers , 8 34 F.3 d 1 2 6 9 , 1 2 79 (1 1 t h Ci r. 2 0 16 ) (“ Bo n a fi d e res i d en cy fo r t ax p urp o s es i s a ques t i o n o f l aw, o r atl eas t a
m i x ed qu es t i on o f fact an d l aw[.] ”), v acat i n g an d rem an d i n g 1 4 4 T.C. 6 3 (2 0 1 5 ); So ch u rekv . Co m

m i s s i o n er, 3 0 0 F.2 d3 4 , 3 7 (7 t h Ci r. 1 9 6 2 ) (h o ld in g t h ata
co n cl u s i o n reg ard in g b o n a fi d e res i d en cy i s a co n cl u s i o n o f l aw o r atl eas t a d et erm i n at i o n o f a m ix edques ti o n o f fact an dl aw), rev ’ g an drem an d i n g 3 6 T.C. 1 3 1 (1 96 1 ); W ei b l e v . Un i t edSt at es , 2 4 4 F.2 d1 5 8 , 1 6 1 (9 t h Ci r. 1 95 7 ) (h o l d i n g t h atth e qu es t i o n o f wh et h er a t ax p ay er was a b o n a fi de res i d en twas “ a m i x ed qu es ti o n o f l aw an d fact ”). To qu al i fy

fo r t h e fo rei g n earn edi n co m e ex cl us i o n as a b o n a fi d e res i d en t
o f a fo rei g n co u n t ry , a t ax p ay er m u s to ffer “ s t ro n g p ro o f” o f b o n a fi d e res i d en cy i n t h e fo rei gn co u n t ry . Sch o n eb erg er v . Co m m i s s i on er, 7 4 T.C. 1 0 1 6 , 1 02 4 (1 9 8 0 ). Co u rt s co n s id er a n u m

b er o f fact o rs wh en d et erm i ni n g wh et h er a t ax p ay er was a- 1 4 -

[* 1 4 ] b o n a fi d e res i d en to f a fo rei g n co u n t ry . So ch u rekv . Co m m i s s i on er, 3 0 0 F.2 dat 3 8. Th es e fact o rs i n cl u d e:

(1 ) t h e i n ten t i o n o f t h e t ax pay er; (2 ) es t ab l i sh m en to f h i s h om e t em po rari l y i n th e fo rei g n co u n t ry fo r an i n d efi n it e p eri o d ; (3 ) p art i ci pat i o n i n the act iv i t i es o f h i s ch o s en co m m un i t y o n s o ci al an dcu l tu ral l ev el s, i d en t i fi cat i o n wi t h t h e d ai l y l i v es o f t h e p eo p l e an d , i n g en eral , as s i m i l at i o n i n t o t h e fo rei g n en v i ro n m en t ; (4 ) p hy s ical p res en ce i n t he fo rei g n co u nt ry co n s i s ten twi th h i s em pl o ym en t ; (5 ) n ature, ex t en tan dreas o n s fo r t em p o raryab s en ces fro m h i s t em p o raryfo rei g n ho m e; (6 ) as s um

p t i o n o f eco no m i c b u rd en s an dp aym en t o f t ax es t o t h e fo rei g n co u n t ry ; (7 ) s t atu s as res i d en tco n t ras t edt o th at o f t ran s i en t o r s o jo urn er; (8 ) t reat m en tacco rd edh i s i n co m e t ax s t atu s b y h is em p l o y er; (9 ) m ari t al s t atu s an dres i d en ce o f h is fam i l y ; (1 0 ) n ature an d du rat i o n o f h is em pl o y m en t ; wh et h er h i s as s i g n m en t ab ro ad co u l d b e p ro m p tl y acco m p l i s h ed wi t h i n a d efi n i t e o r s p eci fi edt i m e; (1 1 ) g oo dfai t h i n m ak i n g tri p ab ro ad ; wh et h er fo r p urp o s e o f t ax ev as i on . Id . Wh i l e al l o f t hes e fact o rs m ay n o tb e p res en ti n ev ery cas e, t h e ap p l i cab l e fact ors s ho u l d b e co n s i d ered an dwei g h ed . Id . Bel o wwe co ns i d er t h e So ch u rek fact ors .- 1 5 -

[* 1 5 ] 1
. Th e In t en t i o n o f t h e Tax p ay er Th e Co u rto f Ap p eal s i n J o n es v . Co m m i s s i o n er, 9 2 7 F.2 d8 4 9 , 8 5 4 (5 t h Ci r. 1 9 91 ), rev ’ g T.C. M em o . 1 9 8 9-6 1 6 , n o t edth at“ i nt en tp l ay s p erh ap s th e m o s t i m p o rt an tp arti n d et erm i n i n g th e es t ab li s h m en tan dm ai n t en an ce o f a fo rei g n
res i den ce.” Tes t i m o n y

fro m th e t ax p ay er t h ath e i n t en d edt o b e a b o n a fi d e
res i den t o f a fo rei g n co un try i s n o t s u ffi ci en t . See, e.g ., Aco n e v . Co m m i s s i o n er, T.C. M em o . 2 01 7 -1 6 2 , at* 1 6 . Rat h er, we l oo kfo r o b ject i v e i n d i ci a o f an i n t en t i o n t o es t ab l i s h res i den ce i n th e fo rei g n co u n t ry . Id . (h o l d i n g th atth i s fact or wei g h edag ai n s tth e t ax pay er wh en th e t ax p ay er’ s t es t i m o n y t h ath e i n t en d edt o b e a b o n a fi d e res i d en twas n o t acco m p an i edb y an y o bject i v e, co n cret e fact th at p ers u as i v el y

d em o n s t rat edth ati n t en t ). In J o n es v . Co m m i s s i o n er, 9 2 7 F.2 d at8 5 4 , t h e t ax p ay er’ s v o l un t ari l y d ecl i n i ng t o t ak e a p aym en t fro m th e St at e o f Al as k a t o i ts res i d en ts was a co n cret e, o b ject i v e, co n s equ en t i al d i s cl ai m er o f Un i ted St at es res i d en cy

th atm ad e m

u ch m o re cred i b l e t h e t ax p ay er’ s cl ai m o f fo rei gn res i d en cy . By co n t ras t , h ere, as i n Aco n e v . Co m m i s s i o n er, at* 1 6 , n o o b

ject i v e fact d em o n s t rat es th atp et i t i o n er i n t en d edt o b e a b o n a fi d e res i d en t o f Th ai l an d . He
en t ered th e co un t ry

o n t em p orarytran s i tan dn o n i m

m i g ran t v i s as th atex p i redaft er 3 0 d ay s . Onth e few o ccas i o n s t h ath e s o u g h tex t en si o n s , they were d en i ed . He- 1 6 -

[* 1 6 ] co ul dn o tl eas e o r o wnreal p ro p ert y i n Th ai l an d . An d t h ere i s n o i n d i cat i o n t h ath e s o u g h tt o o b t ai n a res id en cy v i s a o r ci t i zen sh i p i n Th ai l an d . W e h ol dth at t h i s fact o r wei g h s ag ai n s tp et i t i o n er.

2
. Th e Es t ab l i s h m en to f a Tem p oraryFo rei g n Ho m e fo r an In d efi n i t e Peri o d It is d i ffi cu l t t o co n cl u de o n th i s reco rdth atp et i ti o n er es tab l i s h ed a h o m e i n Th ai l an dfo r an i n d efi n i t e p eri o d . Hi s t em p o rary t ran si t an dn o n i m

m i g ran tv i s as req u i redh i m

t o l eav e Th ai l an daft er 3 0 d ay s an d d idn o tp erm i t h i m t o l eas e o r
o wnp ro p ert y . No r was h e l i s t edas a t en an to n h is wi fe’ s l eas e. Th ere i s n o i n d i cat i o n t h at p et i ti o n er h ad o r co u l dh av e an y l eg al ri g h tt o res i d e ath is wi fe’ s ap art m en ti n Th ai lan d . Th erefo re, t h i s fact o r wei g h s ag ai n st p et i t io n er.

3
. As s i m il at i o n In t o th e Fo rei g n En v i ro n m en t Pet i t i o ner m arri edi n Th ai l an d t h e s am e y ear h e b eg an wo rk i n g fo r OAI. Pet i t io n er d i dn o tp res en tan y o t h er ev i d en ce o n h i s cu ltu ral i m m ers i o n i n Th ai l an d . An dth e cred i t card s t at em en ts s h o w th ath e s ti l l g o th is h ai rcu t s , wen t t o the ey e d o ct o r, an db o u g htco rrect i v e l en s es i n th e San J o s e area. W e co n cl u d e t h ath i s m ari t al s t atu s i s o ffs et b y th e l acko f an y

ev i d en ce o f as s i m i l at i o n i n t o th e Th ai co m m u n i t y . Th erefo re, t hi s fact o r i s n eu t ral
.- 1 7 -

[* 1 7 ] 4
. Ph y s i cal Pres en ce i n th e Fo rei g n Co u n t ry Co n s i s t en tW i t h Hi s Em p lo ym en t OAI d i dn o treq ues t o r req u i re t h atp et i t i o n er res i d e o r s p en dan y o f h i s t i m e i n Th ai l an d . Ho wev er, h e s p en tm o sto f h i s n o n wo rk i n g d ay s i n Th ai l an ddu ri n g each y ear i n i s s u e. Th erefo re, t h i s fact o r wei g h s i n fav o r o f p et i t i o n er.

5
. Th e Nature, Ex t en t , an dReas o n s fo r Tem p o rary Ab s en ces Fro m Hi s Tem

p oraryFo rei g n Ho m e Wh en p et i t i o n er was n o two rk i ng --fl y i n g o r i n trai ni n g --h e s pen tm o s to f h is t i m e i n Th ai l an d , as n o t edab o ve. Sp eci fi cal l y , h e s p en t 1 5 3 d ay s i n Th ai l an di n 2 0 1 2 , 1 7 1 d ay s i n 2 0 1 3 , an d 1 1 4 d ay s i n 2 0 1 4
. Th erefo re, t h i s fact o r wei gh s i n fav o r o f p et i t i o n er. See Ven t o v . Di r. o f V.I. Bu reau o f In t ern al Rev en u e, 7 1 5 F.3 d4 5 5 , 4 6 7 (3 dCi r. 2 0 13 ) (“ [E] x t en s i v e ab s en ces wi ll n eg at e a fi n d in g o f b o n a fi de res i d en cy , u n l es s th o se ab s en ces are ju st i fi edb y g o o d -fai t h reas o ns , s u ch as t h e t rav el req u i rem en t s o f t he t ax p ay er’ s p ro fes s i o n .”).

6
. As s u m p t i o n o f Eco n o m i c Bu rd en s an d Paym en to f Tax es t o th e Fo rei g n Co u n t ry Pet i t i o ner d i dn o tp ay an y t ax es t o Th ai l an dduri n g an y o f t h e y ears i n i s s u e b u ti n d i cat edo n h i s Fo rm s 2 5 5 5 thath e was req u iredt o p ay i n co m e t ax t o Th ai l an d . Set t i n g as i d e th i s i n co n s i s t en cy , th e n o np aym en to f t ax es t o Th ai l an d wei g h s ag ai n s tp et i t i o ner. An d wh i l e h e b ro ad l y as s ert s t hath e co n t ri b u t ed- 1 8 -

[* 1 8 ] t o ward s l i vi n g ex p en ses ath i s wi fe’ s ap art m en t, h e d i d n o t es t ab l i sh wh at
am ou n t s h e p ai d , n o r was h e l i ab l e fo r an y am o un twi t h res p ectt o the ap art m en t as h e was n o t l i s t edas a t en an to n h i s wi fe’ s l eas e. Th erefo re, t h i s fact o r wei g h s ag ai n s tp et i t i o n er.

7
. St atu s as Res i d en tCo nt ras t edt o Th ato f Tran s i en to r So jo u rn er Pet i t i o ner’ s t em

p o rarytran s i tan dn o n i m

m i g ran tv i s as al l o wed h i m t o s t ay i n Th ai l an dfo r o n l y 3 0 d ay s ata t i m e. Pet i t i o n er t es t i fi edth atth es e t em p o rary t ran s itan dn o n i m

m i g ran tv i s as “ wo rk edv ery wel l ” b ecau s e h e wo ul dty p i cal l y l eav e o n ce p er m o n t h fo r ab o u t1 8 d ay s ata t i m e fo r wo rkan d , wh en h e ret u rn ed h e wo u l dh av e a fres h 3 0 d ay s t o s t ay i n Th ai l an d“ w i t ho u tap p ly i n g fo r an yt h i n g , o r d o in g an y

ex t ra wo rk , o r p ay i n g an y m o n ey ”. Pet i t io n er s t at edth atap p ly i n g fo r
a res i den t i al v i s a “ was a wh o l e o t h er b al l o f wax en t i rel y ”, an dh e “ d i dn ’ ttry t o ch as e an yt h i n g el s e d o wn . ” Hi s fai l u re t o p u rs u e a m ore p erm an en to p t i o n h ad real co n s equ en ces as h e co ul d n o tl awfu l l y wo rk o r h o l dan y i n t eres t s i n real p ro p ert y i n Th ai l an d . Ad d i t i on al l y , p et i ti o n er s t at edo n h i s Fo rm s 2 55 5 thath e
s ub m i t t eda s t at em en tt o th e Th ai l an dGo v ern m en tthath e was “ n o ta res i d en to f t h atco u n t ry .” Hi s s t atu s th u s was m o re ak i n t o t h ato f a t ran s i en to r s o jo u rn er i n Th ai l an d , an dth erefo re, t h i s fact o r wei gh s h eav i l y ag ai n s t h im
.- 1 9 -

[* 1 9 ] 8
. Treat m en tAcco rd edh i s In co m e St atu s b y Hi s Em p l o y er Pet i t i o ner’ s em

p l o y er, OAI, was b as edi n th e Un it edSt at es . OAI wi t h h el d Fed eral an dCal i fo rn i a St at e i n co m e t ax fro m p et i t i o ner’ s wag es fo r each y ear i n i s su e. Th erefo re, t h i s fact o r wei g h s ag ai ns tp et i t i o n er.

9
. M ari t al St atu s an dRes i d en ce o f Fam i l y Pet i t i o ner t es t i fi edth ath e was m arri ed i n Th ai lan dan dl i vedth ere wi t h h i s wi fe an d h i s s t ep d au g h t er, an d we accep t edh i s t es t i m o ny . Yetwe can n ot
o v erl o o kh i s fai lu re t o ex p l ai n wh y h e fi l edh i s Fo rm 1 0 4 0 as “ s i n g l e” fo r each y ear i n i s s u e o r wh y

h e s t at edo n h i s Fo rm

2 5 5 5 th ath e d i dn o tl i v e wi t h an y fam i l y m em b ers ab ro ad
. Th i s u n ex p l ai n edco n fl ictb et ween h i s m arri ag e s t atu s
an d h i s el ect i o n ren d ers t h i s fact o r n eu tral atb es t
.

1 0. Natu re an d Du rat i o n o f Hi s Em p l o y m en t Becau s e h i s em

p l o ym en ti s n o twh atb ro u g h tp et i t i o n er t o Th ai l an d , th i s fact or i s n o tap p l i cab le i n t h i s cas e. See So ch u rekv . Co m m i s s i o n er, 3 0 0 F.2 d at3 8 -3 9 (d i s t i n g u i s h in g s i tu at i o n s wh ere a t ax p ay er’ s em p l o y m en tab ro adi s l i m i ted t o a s p eci fi c t i m efram e fro m s i tu at i o ns wh ere a t ax p ay er’ s em pl o ym en t ab ro ad was n o t b u tal s o ex p l ai n i n g th at n o tal l fact o rs m ay b e p res en t i n ev ery
cas e).- 2 0 -

[* 2 0 ] 1 1. Go o dFai t h W e n o tedab o v e s ev eral co n fl i ct s i n p et it i on er’ s arg u m en t t h atg i ve u s
reas on t o qu es t i on wh et her h e act ed i n g o o dfai t h . Fi rs t , p et i t i o n er s t at edo n h i s Fo rm s 2 5 5 5 th ath e was s ub jectt o t ax es t o Th ai l an db u t s t ip u l at edth at h e d i dn o t p ay an y t ax es t o Th ai l an ddu ri n g an y o f t h e y ears i n i s su e. Fo rm 2 5 5 5 ex p l i ci t ly
s t at es th ata t ax p ay er d o es “ n o tqu al i fy as a b o n a fi d e res i d en t ” o f a fo rei g n
co u nt ry i f th e t ax p ay er ch eck s “ Yes ” t h ath e s ub m it t eda s t at em en tt o fo rei g n
au t h o ri t ies th ath e i s n o ta res i d en to f t h atco un t ry (l i n e 1 3a) an d“No ” t hath e i s
n o ts ub jectt o t ax i n the fo rei g n co u n t ry (l i n e 1 3 b ). See s ec. 9 1 1 (d )(5 ). Seco n d , p et i t i o n er t es t i fi edattri al t h ath e was m arri ed an dl i v edwi th h i s wi fe an d
s t ep d au g h t er i n Th ai l an d , b u t h e el ect ed s in g l e s t atu s o n h i s Fo rm s 1 0 40 an d i n d i cat edo n Fo rm s 2 5 55 th ath e d i dn o t l i v e ab ro adwi t h an y fam i l y m em b ers . Th i rd , p et i ti o n er s t at edo n h i s Fo rm s 1 0 40 th ath i s Th ai l an dv is as d i dn o tl i m i th i s
s t ay s i n Th ai l an d b u tt es t i fi edattri al th ath e rel i eds o l el y o n t em p o rarytran s i tan d
n o n i m m i g ran tv is as thatreq u i redh im t o l eav e aft er 3 0 d ay s . Fo u rth , h e t es t i fi edat t ri al th ath e n ev er h ada v is a ex t en s io n d en i edb y Th ai lan d ; b u t wh en co nfro n t ed wi t h d ocu m en t ary

ev i d en ce s h o wi n g th ath e was d en i edan ex ten s i o n n o l es s th an t wi ce du ri n g th e y ears i n i s s u e, h e d i dn o trecal l th e d en i al s an dco n s i d eredth em
m i n i m al . Th es e i n co n si s t en ci es t i l tth i s fact or ag ai n s tp et i t i o ner as wel l
.- 2 1 -

[* 2 1 ] In s u m , s i x fact o rs wei g h ag ai n s tp et i t i o n er, t wo fact o rs wei g h i n fav o r o f p et i t i o n er, an dtwo fact ors are n eu t ral . W e v i ew as m o s t s i g n i fi can tth at : (1 ) p et i t i o n er rel i ed o n t em p o rarytran s i tan dn on i m

m i g ran tv i s as an dd i dn o t p u rs u e res i d en cy , (2 ) h e fi l eda s t at em en twi t h th e Th ai l an d Go v ern m en tth ath e
was n ota res i d en to f Th ai l an d , (3 ) h e d i dn o tp ay an y t ax es t o Th ai l an d, (4 ) h e was
n o ta t en an tu n d er t he t erm s o f h i s wi fe’ s l eas e, an d (5 ) h is t es t i m o n y co nt rad i ct ed h i s Fo rm s 1 0 4 0 i n s ev eral i m p o rt an tres p ect s . Acco rd in gl y , we h o l dth at p et i t i o n er
was n ota b o n a fi de res i d en t of Th ai l an d du ri n g t h e y ears i n i s su e. Th erefo re, p et it i o n er i s n o ta qu al i fi edi n d i v i dual as d efi n edb y s ect i o n 9 1 1 (d )(1 ) b ecau s e h is t ax h o m e was i n San J os e an db ecau s e h e d idn o t s h o w th at h e s at i sfi edth e b o n a fi de res i d en ce t es t
. 3 See s ec. 9 11 (a), (d ). He, acco rd in g l y , i s
n o ten ti t l edt o ex cl u d e an y o f h i s i n co m e as an OAI p il o t u n d er t h e fo rei g n earn ed i n co m e ex cl u s i o n fo r the y ears i n i s s u e. See i d.

3 Ev en i f a t ax p ay er i s n o ta b o n a fi d e res i d en to f a fo rei g n co u n t ry , h e can s t il l b e a q u al i fi edi n d iv idu al i f h e was p h y s i cal l y p res en ti n a fo rei g n co u nt ry o r co u nt ri es fo r a cert ai n n u m ber o f d ay s . Sec. 9 1 1 (d )(1 )(B). Pet i t i o n er d i dn o t as s erti n h i s retu rn s , p et it i o n , o r o n b ri ef t h ath e s at i s fi edth i s p hy s i cal p res en ce t es t . Ad d i t i o n al l y , h e d id n o tp ro v i d e an y i n fo rm at io n wi t h res p ectt o t h e p h y s i cal p res en ce t es t o n h i s Fo rm s 2 5 5 5 . Acco rd in g l y , we d eem th i s arg u m en t co n ced ed
. See Ru l es 3 4 (b )(4 ), 1 4 9 (b ).- 2 2 -

[* 2 2 ] II. Cal i fo rn i a St at e In co m e Tax Refu n d s W e n o wtu rn t o wh et h er p et i t i o n er fai l edt o rep o rtCal i fo rn i a St at e i nco m e t ax refu n d s h e recei v eddu ri n g th e y ears i n i s s ue. Gen eral l y , u n der s ect i o n 1 1 1
an d t h e reg u l at i on s t h ereu n der, i f St at e i n co m e t ax was d edu ct edo n a p ri o r y ear’ s Fed eral i nco m e t ax return an d res u l t edi n a redu ct i o n o f Fed eral i n co m e t ax an da t ax b en efi tt o the t ax p ay er, t h e t ax p ay er’ s s ubs equ en treco v ery o f t h e St at e i n co m e t ax m u s t b e i n cl ud edi n g ro s s i n co m e fo r t h e y ear i n wh i ch the reco very i s recei v ed . See Kay

v . Co m m i s s i o n er, T.C. M em o . 2 0 1 1 -1 5 9. Pet i t i o ner recei vedb u t fai l edt o rep o rtCal i fo rn ia St at e i n co m e t ax refu n ds
o f $ 7 , 5 8 5 , $ 6 ,0 56 , an d$ 6 , 3 8 2 fo r 2 0 1 2 , 2 0 1 3 , an d2 0 14 , res p ect i v el y . He cl ai m ed d educt i o n s fo r Cal i fo rn i a St at e i n co m e t ax o f $ 7 ,0 53 o n h i s 2 0 1 2 t ax retu rn an d $ 7 ,3 5 5 o n h is 2 0 1 3 retu rn . He d i dn o ti n t ro du ce ev i den ce wi t h res p ectt o h i s 2 0 1 1 t ax return o t h er t h an h i s o wnt es t i m o n y th ath e t o o k a d edu ct i o n fo r Cal ifo rn i a St at e i nco m e t ax i n 2 01 1 ju s tas h e d i d fo r 2 0 1 2 , 2 0 1 3 , an d2 0 14
. Pet i t i o ner d i dn o td i s p ut e t h ath e recei v edth e Cal i fo rn ia St at e i n co m e t ax refu nd s . In s tead , h e arg uedth atth e refu n d s wo u l dres u l ti n a t ax b en efi t t o h i m
o n l y i f, co m p u t at i o n al ly , h i s i t em i zedd educt i o n s fo r each y ear h e d edu ct edth e- 2 3 -

[* 2 3 ] St at e i n co m e t ax ex ceed edth e s t an d ardd educt i o n fo r th aty ear. 4 Th e n o t i ce
o f d efi ci en cy s ho ws th atth e Co m m i s s i o n er al l o wed i tem i zedd edu ct i o n s o f m o re t h an th e s t an d ardd edu ct i o n am o u n t s fo r 2 0 1 2 an d 2 0 1 3 . Becau s e we h av e d et erm i n edh ere t h at p et i t io n er was n o tel i g i b l e t o ex cl u d e t h e wag es h e recei v ed fro m OAI fo r t he y ears i n i ss ue, h e wi l l recei v e a t ax b en efi tfro m the St at e t ax h e d educt edfo r 2 0 1 2 an d2 0 1 3 b ecau s e h i s i t em i zedd edu ct i o n s (wh i ch i n cl u dedh i s Cal i fo rn i a St at e i n co m e t ax ) ex ceed edth e s t an d ardd edu ct i o n fo r each o f t h o s e y ears . See s ec. 1 .1 1 1 -1 (b ), In co m e Tax Reg s . Acco rd i n g ly , th e refu n d s o f Cal i fo rn i a St at e i n co m e t ax h e recei v edi n 2 0 1 3 an d 2 0 1 4 are i n cl u d ab l e i n h i s g ro s s i n co m e fo r t h o s e y ears . W i t h res p ect t o th e refu n dh e recei v edi n 2 0 1 2 , we h o l dth at p et i t i o n er fai l ed t o i nt ro du ce ev i den ce o f h i s 2 0 1 1 i t em i zedd edu ct i o ns an d , th erefo re, h e fai l edt o carryh i s b u rd en o n thi s i s s u e. See Bro b s tv . Co m m i ss i o n er, T.C. M em o . 1 9 8 8
- 4 5 6 , 1 9 8 8 Tax Ct . M em o LEXIS 5 0 0 , at* 11 -* 1 2; s ee al s o Ch arl es t on Nat ’ l Ban k
v . Co m m i s s i o n er, 2 0 T.C. 2 5 3, 2 6 3 (1 9 5 3 ) (h o ld i n g th at a t ax p ay er h ad“ wh o l l y fai l edt o carry i t s b u rd en o f s h o wi n g th atp ri o r d edu ct i o n s * * * were wi t h o u tt ax b en efi t ”), aff’ d , 2 1 3 F.2 d4 5 (4 t h Ci r. 1 9 5 4 ). Acco rd i n g l y , th e refu n d o f

4 Th e s t an dardd edu ct i o n fo r an i n d i v i du al fi l in g as “ s i ng l e”, s u ch as p et i t i o n er, was $ 5 ,8 0 0 fo r 2 0 11 , $ 5 ,9 5 0 fo r 2 0 1 2 , an d$ 6 , 1 0 0 fo r 2 0 1 3
.- 2 4 -

[* 2 4 ] Cal i fo rn ia St at e i n co m e t ax h e recei v edi n 2 0 12 i s i n cl ud ab le i n h i s g ro s s i n co m e fo r t h aty ear. An y co nt en t i o n s we h av e n o tad dres s edwe d eem i rrel ev an t , m o o t, o r
m eri t l es s . To refl ectthe fo reg o i n g , Anap p ro p ri at e d eci s i o n wi l l b e
en t ered
.