John D. McComish and Genevieve A. McComish v. Commissioner of Internal Revenue

Under section 911(a)(2) of the Internal Revenue Code, United States citizens who reside in foreign countries for more than 17 months need not pay income tax on foreign-source income, provided the income is not received from the United States or a United States agency. The question presented in this case is whether the Taxpayers, Mr. and Mrs. McComish, can benefit from the exclusion provided by section 911(a)(2).

John D. McComish, a United States citizen, was employed during 1967 and 1968 as the District Attorney of the government of the Trust Territory of the Pacific Islands (hereinafter “Trust Territory”). His wife, who also resided in the Territory, was employed in a private capacity. In 1968, the Taxpayers filed a joint return with the Internal Revenue Service, excluding their salaries earned in the Trust Territory from their computation of income.

The Commissioner asserted a deficiency against the Taxpayers in the amount of $2,810.45. After paying this amount, the Taxpayers brought suit in the Tax Court for a refund. The Tax Court upheld the Commissioner’s determination that Mr. McComish’s salary constituted taxable income, concluding that the Trust Territory of the Pacific…