When it comes to the foreign earned income exclusion, a federal appeals court has upheld a ruling that Antarctica does not qualify as a foreign country. The Seventh Circuit Court affirmed a U.S. Tax Court decision that the 2001 earnings of a U.S. citizen living in Antarctica are subject to federal taxes.The petition was brought by Dave Arnett, a U.S. citizen and an employee of Raytheon Support Services Co., who worked on the continent at McMurdo Station, a research center that typically receives personnel and cargo en route to the South Pole. On his 2001 federal income tax return, Arnett excluded nearly $50,000 of wage income earned for services performed in Antarctica.

While the Supreme Court had found Antarctica to be a foreign country for purposes of the Fair Labor Standards Act, both courts agreed that income earned on the continent is not excludable under Section 911 of the U.S. Tax Code.

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