narrowly, and taxpayers must bring themselves within the clear scope of the exclusion. Id.

III. Section 911

Section 911(a) provides in part that a "qualified individual" may elect to exclude from gross income his or her "foreign earned income". Section 911(b)(2) limits the amount of the exclusion for foreign earned income to $78,000 for 2001.

Section 911(b)(1)(A) defines "foreign earned income" to mean, in general, "the amount received by such individual from sources within a foreign country or countries which constitute earned income attributable to services performed by such individual" during the period set forth in section 911(d)(1). Section 911(b)(1)(B) excludes from foreign earned income certain amounts not relevant to this case.

Section 911(d)(1) defines "qualified individual" for purposes of section 911 to mean:

an individual whose tax home is in a foreign country and who is

(A) a citizen of the United States and establishes to the satisfaction of the Secretary that he has been a bona fide resident of a foreign country or countries for an uninterrupted period which includes an entire taxable year, or

(B) a citizen or resident of the United States and who, during any period of 12 consecutive months, is present in a foreign country or countries during at least 330 full days in such period.

Section 911(d)(9) authorizes the Secretary to prescribe "regulations as may be necessary or appropriate to carry out the purposes of" section 911. Pursuant to that grant of authority, the Secretary promulgated proposed regulations under section 911 in 1983, see 48 Fed. Reg. 33007 (July 20, 1983), and final regulations in 1985, see T.D. 8006, 1985–1 C.B. 224, that apply to the year in issue.

These regulations are legislative; therefore, they are entitled to Chevron deference and are binding on the courts unless procedurally defective, arbitrary or capricious in substance, or manifestly contrary to the statute. United States v. Mead Corp., 533 U.S. 218, 227 (2001); Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984); Specking v. Commissioner, supra at 115.

The Internal Revenue Code (Code) does not define "foreign country" for purposes of section 911. However, section 1.911– 2(h), Income Tax Regs., provides:

(h) Foreign country. 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. It includes the territorial waters of the foreign country (determined in accordance with the laws of the United States), the air space over the foreign country, and the seabed and subsoil of those submarine areas which are adjacent to the territorial waters of the foreign country and over which the foreign country has exclusive rights, in accordance with international law, with respect to the exploration and exploitation of natural resources. [Emphasis added.]

The parties disagree regarding whether this definition of "foreign country" includes Antarctica. If Antarctica is a "foreign country" for purposes of section 911, petitioner may be able to exclude from income the wage income he earned in Antarctica. If Antarctica is not a "foreign country" for purposes of section 911, petitioner must include in income the wage income he earned in Antarctica.

IV. Caselaw

In Martin v. Commissioner, 50 T.C. 59 (1968), we decided a similar issue-whether a U.S. citizen can exclude income earned in Antarctica. We held that Antarctica is not a foreign country within the meaning of section 911(a)(2) and section 1.911-1(b)(7), Income Tax Regs., as in effect in 1962.

In Martin, the taxpayer, as an employee of a private taxexempt U.S. organization, took part in an Antarctic expedition. The taxpayer claimed, as does petitioner, that his earnings in Antarctica were exempt from tax under section 911, and the only question raised in this respect in Martin was whether Antarctica is a foreign country.

In finding that Antarctica is not a foreign country within the meaning of section 911(a)(2), we relied on a treaty effective June 23, 1961, between the United States and a number of other nations regarding Antarctica. The Antarctic Treaty, Dec. 1, 1959, 12 U.S.T. 794. The treaty provides that Antarctica is to be used for peaceful purposes, that scientific investigation there is to be encouraged, and that all questions of sovereignty over it are to be put in abeyance.

We also relied on the language of section 1.911-1(b)(7), Income Tax Regs., as in effect at the time, which defined "foreign country" as follows: "The term 'foreign country' means territory under the sovereignty of a government other than that of the United States and includes the air space

over such territory. It does not include a possession or Territory of the United States."

We noted that in the light of the international treaty concerning Antarctica, the U.S. Department of State did not consider Antarctica to be under the sovereignty of any government. Therefore we held that Antarctica was not a foreign country within the meaning of the regulations or of section 911 as then in effect. Martin v. Commissioner, supra at 62; see also Rev. Rul. 67-52, 1967-1 C.B. 186.

The treaty regarding Antarctica is still in effect, and therefore Antarctica remains a sovereignless region.3 Petitioner nevertheless contends that Martin has been overruled and superseded by the holding of the Supreme Court of the United States in Smith v. United States, 507 U.S. 197 (1993), and the holding of the U.S. District Court for the District of Massachusetts in Smith v. Raytheon Co., 297 F. Supp. 2d 399 (D. Mass. 2004).

In Smith v. United States, supra at 198, the issue was "whether the Federal Tort Claims Act (FTCA), 28 U.S.C. §§ 1346(b), 1402(b), 2401(b), 2671-2680 (1998 ed. and Supp. II), applies to tortious acts or omissions occurring in Antarctica, a sovereignless region without civil tort law of its own." The plaintiff, Mrs. Smith, brought a wrongful-death action against the United States under the FTCA for the death of her husband, Mr. Smith. At the time of his death, Mr. Smith was employed as a carpenter at McMurdo Station on Ross Island, Antarctica, for a construction company under contract to the NSF, the same agency that had a contract with Raytheon in the instant case. Mr. Smith died after falling into a crevasse in Antarctica.

The Supreme Court held that Antarctica is a foreign country for purposes of the FTCA. Id. at 201-202. The Supreme Court reasoned that Mrs. Smith's claim was barred by the foreign-country exception of the FTCA under 28 U.S.C. sec. 2680(k), which precludes the exercise of jurisdiction over "any claim arising in a foreign country." The Court based its conclusion on the particular language of the FTCA. Id. at 201205.

3 The treaty was in force as of Jan. 1, 2005. Treaties in Force, http://www.state.gov/documents/ organization/53776.pdf.

In Smith v. Raytheon Co., supra, the U.S. District Court for the District of Massachusetts held that Antarctica is a foreign country for purposes of the Fair Labor Standards Act (FLSA). The plaintiffs claimed that the FLSA required their employer, Raytheon, which had entered into a contract with the NSF to perform services in Antarctica, to pay them overtime for work they performed in Antarctica. Id. at 400. The FLSA requires an employer to pay an employee "at a rate not less than one and one-half times the regular rate at which he is employed" for the hours the employee works in excess of 40 hours per week. 29 U.S.C. sec. 207(a). However, there are several exceptions to this rule including geographical limits. Certain provisions of the FLSA, including section 207, do not apply where employee services are performed within a foreign country. 29 U.S.C. sec. 213(f). The court concluded that Antarctica is a foreign country for purposes of the FLSA and based its conclusion on the particular language of the FLSA. Smith v. Raytheon Co., supra at 401-402.

In the instant case, we are revisiting the same issue we discussed in Martin v. Commissioner, supra. Although the statutory and regulatory provisions discussed in Martin have been modified and there have been caselaw developments since Martin, these changes do not affect the conclusion that petitioner's income earned in Antarctica is subject to tax in the United States and petitioner does not qualify for the foreign earned income exclusion under section 911.

Moreover, both Smith v. United States, supra, and Smith v. Raytheon Co., supra, discuss the issue of whether Antarctica is a foreign country within the context of statutes other than the Code. The provisions of the Code and the applicable regulations are controlling herein. Therefore, we do not find Smith and Raytheon Co. to be controlling, and we will not overrule our holding in Martin that Antarctica is not a foreign country for purposes of the Code.

V. Conclusion

The foreign earned income exclusion of section 911 applies to amounts received "from sources within a foreign country or countries". As Antarctica is not a foreign country for purposes of the Code, we conclude that petitioner is not entitled to exclude the wage income he earned in Antarctica from

income for 2001 pursuant to section 911. See also sec. 863(d) (providing that income earned in Antarctica by a U.S. person is sourced in the United States).

In reaching all of our holdings herein, we have considered all arguments made by the parties, and, to the extent not herein discussed, we find them to be irrelevant or without merit.

To reflect the foregoing,

An appropriate order and decision will be entered granting respondent's motion for summary judgment and denying petitioner's motion for partial summary judgment.

SWALLOWS HOLDING, LTD., PETITIONER v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT

Docket No. 8045-02.

Filed January 26, 2006.

P is a foreign corporation whose only substantial asset is unimproved land in the United States. On its 1994, 1995, and 1996 Federal income tax returns, P recognized rent and option income and claimed deductions for taxes and licenses, the result of which was a reported loss for each year. P filed each return after its due date, but before any contact from R. R determined that sec. 882(c)(2), I.R.C., precluded P from deducting its expenses because it filed its returns untimely. In Anglo-Am. Direct Tea Trading Co. v. Commissioner, 38 B.T.A. 711 (1938), a setting similar to that here, the Board held that sec. 233 of the Revenue Act of 1928, ch. 852, 45 Stat. 849, and the Revenue Act of 1932, ch. 209, 47 Stat. 230, an almost verbatim predecessor to sec. 882(c)(2), I.R.C., did not include a timely filing requirement and rejected R's contrary interpretation. Subsequently, the Court of Appeals for the Fourth Circuit construed like predecessor text similarly, also in rejection of R's contrary interpretation. See Blenheim Co. v. Commissioner, 125 F.2d 906 (4th Cir. 1942), affg. 42 B.T.A. 1248 (1940); Ardbern Co. v. Commissioner, 120 F.2d 424 (4th Cir. 1941), modifying and remanding on other grounds 41 B.T.A. 910 (1940). R continues to adhere to his rejected interpretation and now attempts to support that interpretation by citing Treasury regulations issued in 1990. Those regulations interpret sec. 882(c)(2), I.R.C., to provide that a foreign corporation generally is entitled to deduct its expenses only if it files a timely return. Held, a timely filing requirement is not found in a plain reading of sec. 882(c)(2), I.R.C. Held, further, the