Daniel A. Robida v. Commissioner of Internal Revenue

The Commissioner of Internal Revenue determined substantial deficiencies in Robida’s federal income tax for the years 1956-61. The tax court held that the income in question was exempt under section 911 of the Internal Revenue Code of 1954. The Commissioner appeals. We affirm.

BACKGROUND

Robida is an American citizen who lived abroad during the years in question and who derived his income from slot machine pay-offs in various United States military service clubs. To eliminate the element of chance and thereby guarantee his “winnings,” Robida would manipulate the slot machines, using spe cial knowledge he acquired from employees of the Japanese manufacturer of the machines. He excluded the income thus derived from taxable gross income pursuant to 26 U.S.C. § 911 , which permits an exemption for “earned income” in the case of a United States citizen living abroad for at least 510 days in a period of 18 consecutive months.

The tax court initially denied the § 911 exemption to Robida, but we remanded to permit further discovery of documents then being held by German government authorities. Robida v. Commissioner, 9 Cir., 1967, 371 F.2d 518 . In the proceedings on remand the tax…