You know by now that I have an affinity for tax opinions and rulings that I consider a little weird. Well, I found another one. Before I give you the holding in this court case, let me set the stage.

During 2001, Dave Arnett was employed to conduct certain research in Antarctica by Raytheon Support Services Co., who was under contract with the National Science Foundation, a U.S. agency. Arnett, a U.S. citizen, resided and performed services at McMurdo Station in Ross Island, Antarctica. On his 2001 Federal income tax return, he excluded $48,894, his wages for services performed in Antarctica, as excludible foreign earned income under Section 911. His dispute with the IRS ended up in the Tax Court.

The Tax Court, in Arnett, 126 T.C. No. 5, points out that Code doesn't define 'foreign country' for purposes of Section 911, but indicates Reg. 1.911-2(h), provides, "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."

In its opinion, the Tax Court refers to its earlier 1968 decision, Martin, 50 T.C. 59, in which it held that Antarctica wasn't a foreign country within the meaning of the regulations or Section 911. That decision was based on the international treaty that states Antarctica isn't under the sovereignty of any government.

Despite the treaty still being in effect, Arnett argues that Martin has been overruled and superseded by the holding in Smith, 507 U.S. 197 (1993), in which the U.S. Supreme Court held that Antarctica is a foreign country for purposes of the Federal Tort Claims Act, and the holding in Smith v. Raytheon Co. in which the U.S. District Court for the District of Massachusetts, 297 F. Supp. 2d 399 (D. Mass., 2004), held that Antarctica is a foreign country for purposes of the Fair Labor Standards Act.

The Tax Court quickly dismissed both opinions, stating, "The provisions of the Code and the applicable regulations are controlling here. ... Antarctica is not a foreign country for purposes of the Code."

So, is Antarctica a foreign country? I guess the answer to the question depends on why your asking, who wants to argue with you, and which court you end up in.

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