In Uncategorized on 09/18/2017 at 17:33

No, not a plot-pitch for a remake of Miss Saigon; the virgin in this case is a Virgin Islander of our past acquaintance, la famille Vento.

This is the story of Jesse A. Linde and Dawn Linde, 2017 T. C. Memo. 180, filed 9/18/17, but Dawn only appears on those rare occasions when Jesse comes back to their marital home in AL.

Jesse is a Ft. Rucker trained helicopter pilot, who retired from the Army once, came back for Iraq, retired again, and became a civilian contractor living in a converted CONEX container in Iraq, while flying choppers hither and yon. Jesse was over-age by US standards, and there were bunches of young chopperheads getting all the good Stateside jobs.

Jesse would work long arduous days in Mesopotamia, and come home for brief stints. He says his nearest and dearest would have visited him in Europe, but his son-in-law had a service-connected disability, so he couldn’t travel. Though he was on annual contracts, these were always renewed during the years at issue. And Jesse wasn’t planning on retiring soon.

Judge Vasquez buys it.

IRS says no foreign earned income exclusion, because Jesse’s true home was back in AL.

No, says Judge Vasquez.

“Mr. Linde’s principal place of employment during the years in issue was in Iraq.  Therefore, whether his tax home was in Iraq rests on whether his abode was in the United States during the years in issue.  Neither section 911 nor the regulations thereunder define ‘abode’.  Thus we turn to our caselaw.

“In prior section 911 cases, we have examined and contrasted a taxpayer’s domestic ties (i.e., his familial, economic, and personal ties to the United States) with his ties to the foreign country in which he claims a tax home in order to determine whether his abode was in the United States during a particular period.” 2017 T. C. Memo. 180, at p. 12.

Jesse kept his military bank account, which he could access from AL but the account wasn’t maintained there.

The real capper is our old friends la famille Vento. After a brisk jaunt through the caselaw, with a bow to the seven Sochurek factors, Judge Vasquez fetches up with Judge Hardiman’s decision in Vento.

“In Vento v. Dir. of V.I. Bureau of Internal Revenue, 715 F.3d 455, 467-468 (3d Cir. 2013), the Court of Appeals for the Third Circuit grouped the Sochurek factors into four broad categories:  (1) the taxpayer’s intent, (2) the taxpayer’s physical presence, (3) the taxpayer’s social, family, and professional relationships, and (4) the taxpayer’s representations.  The Court of Appeals for the Eleventh Circuit, to which an appeal in this case would lie (absent a stipulation to the contrary), adopted the Vento categories with the caveat ‘that those factors are not exclusive; rather, the appropriate analysis is one based on the totality of the circumstances relevant to the residency issue.’” 2017 T. C. Memo. 180, at pp. 21-22. (Citations omitted).

You don’t need to be away permanently, or to make your permanent residence abroad. You can keep a US residence, and even have your nearest and dearest dwell in the land and be fed with its riches, as a much Higher Authority put it.

“In sum, Mr. Linde’s acceptance of a long-term assignment in Iraq and his sustained physical presence there weigh heavily in favor of bona fide residency, and we so hold.  See Commissioner v. Estate of Sanders, 834 F.3d at 1280; Vento, 715 F.3d at 470.  Accordingly, since we have already found that Mr. Linde’s tax home was in Iraq during the years in issue, petitioners are entitled to the foreign earned income exclusions claimed on their returns.” 2017 T. C. Memo. 180, at p. 24.

Jesse does get dinged for some employee unreimbursed employee expenses, but that’s par for the course.

Judge Vasquez likes Jesse’s testimony, and gives us yet again his favorite saw: “We find Mr. Linde to be honest, forthright, and credible.  See Diaz v. Commissioner, 58 T.C. 560, 564 (1972) (observing that the process of distilling truth from the testimony of witnesses, whose demeanor we observe and whose credibility we evaluate, is the daily grist of judicial life).” 2017 T. C. Memo. 180, at p. 14, footnote 9.

As for la famille Vento in Third Circuit, see my blogpost “Catching Up,” 9/30/13.

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