In Lock v. IRS, T.C. Summary Opinion 2017-10 (a summary opinion with less precedential weight than a memorandum opinion), the Court provided the following analysis of the taxpayer’s circumstances under the Foreign Earned Income Exclusion law (IRC Section 911):
"Section 911(d)(3) defines the term “tax home” as follows: (3)
Tax home.--The term “tax home” means, with respect to any individual, such individual’s home for purposes of section 162(a)(2) (relating to traveling expenses while away from home). An individual shall not be treated as having a tax home in a foreign country for any period for which his abode is within the United States.
… regardless of the location of an individual’s principal place of business, he will not be treated as having a tax home in a foreign country for any taxable period during which his abode is in the United States. [citations omitted] Neither section 911 nor the regulations underlying that provision define the term “abode”.
The Court has explained in prior cases involving the foreign earned income exclusion that the term “abode” has a domestic connotation that stands in contrast to the taxpayer’s principal place of business. See Bujol v. Commissioner, T.C. Memo. 1987-230, aff’d without published opinion, 842 F.2d 328 (5th Cir. 1988). In determining the taxpayer’s abode under section 911(d), the Court evaluates “the 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” during a particular period. See Harrington v. Commissioner, 93 T.C. at 307-308; see also Eram v. Commissioner, T.C. Memo. 2014-60; Daly v. Commissioner, T.C. Memo. 2013-147. Throughout the period in question Mr. Lock maintained extensive familial, economic, and personal ties to the United States, while his ties to Iraq were quite limited.
Mr. Lock had strong family and personal ties in the United States throughout the period in question. Ms. Lock and the couple’s son resided in the marital home in Florida, and he took them on vacations when he was not working overseas. Although the Locks’ marriage apparently was failing, Mr. Lock stayed in contact with Ms. Lock from Iraq, and he relied on her to send him items that he requested. Likewise, Mr. Lock’s mother, grandmother, and siblings resided in Kentucky where he visited them at least once a year. Mr. Lock also maintained a Florida driver’s license, and he owned two trucks, a boat and a trailer, and numerous firearms that he kept at his home in Florida.
Mr. Lock had numerous economic ties to the United States. He maintained his status as a reserve deputy sheriff in Florida, owned and helped to manage three rental properties there, and organized and served as the resident agent for three startup businesses. He managed his financial affairs through numerous personal and business bank accounts in Florida.
In contrast, Mr. Lock’s primary, if not sole, tie to Iraq was his work for TCI. Although he spent a considerable amount of time in Iraq, and we have no doubt that he developed strong bonds with his coworkers and acquaintances there, Mr. Lock clearly looked forward to leaving Iraq whenever he could to spend time with his family and friends in the United States. Mr. Lock was permitted to enter Iraq only on visas of fairly limited duration, and he did not pursue any business opportunities, open a banking account, or purchase any property there. The austerity of his living quarters in Iraq is strong evidence that his presence in Iraq was transitory and temporary.
Consistent with the foregoing, we conclude that Mr. Lock’s abode was within the United States during the years in issue and therefore we sustain respondent’s determination that he was not eligible for the foreign earned income exclusion under section 911."
Again, Lock is not binding, but it provides a good example of the Tax Court’s reasoning when it denied the Foreign Earned Income Exclusion to a taxpayer earning foreign income. The full account of the facts in that case is available in the Tax Court opinion
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