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U.S. Tax Court Expands Taxpayers’ Ability to Exclude Their Foreign Income

Posted by Kamyar Mehdiyoun, Esq. | Apr 09, 2018

A U.S. citizen worked in Iraq as a military helicopter pilot in 2009, 2010, 2011 and 2012. His primary home was in Alabama. He resided in Iraq for 248 days in 2010, 240 days in 2011 and 249 in 2012. His employer paid for his round-trip tickets to Kuwait at the conclusion of each 60-day work period. Each time, the taxpayer flew back to U.S. where his wife lived. The main issue in the case was whether the taxpayer was a bona-fide resident of Iraq during the tax years at issue. The IRS argued that the taxpayer wasn't a resident of Iraq because his employment in Iraq was governed by a series of one-year contracts that had to be extended each time. The tax court pointed out that the taxpayer intended to stay in Iraq indefinitely and his one-year employment contracts were renewed routinely. The tax court cited prior case law to the effect that a taxpayer's “tax home” is generally his principal place of employment. The tax court held that the taxpayer's stay in Iraq was for an indefinite duration and since his tax home was held to be in Iraq he was allowed to exclude up to $102,100 on his 2017 tax return. T.C. Memo. 2017-180.

About the Author

Kamyar Mehdiyoun, Esq.

Kamyar Mehdiyoun, holds a Master of Law (LL.M.) degree in taxation from Georgetown University Law Center and focuses his practice on tax law. In 2003, he received the Award for Excellence in Tax Practice and Procedure from Georgetown. He also holds a Certificate in Employee Be...

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