Professional Tax Research Solutions from the Founder of Kleinrock. tax and accounting research
Parker Tax Pro Library
Accounting News Tax Analysts professional tax research software Like us on Facebook Follow us on Twitter View our profile on LinkedIn Find us on Pinterest
federal tax research
Professional Tax Software
tax and accounting
Tax Research Articles Tax Research Parker's Tax Research Articles Accounting Research CPA Client Letters Tax Research Software Client Testimonials Tax Research Software Federal Tax Research tax research

Accounting Software for Accountants, CPA, Bookeepers, and Enrolled Agents

Army Officer Not Entitled to Foreign Earned Income Exclusion While in Afghanistan

(Parker Tax Publishing July 2019)

The Tax Court held that an Army intelligence officer who lived and worked on a base in Afghanistan which she could not leave, while her husband and two children stayed in the family home in the United States, was not eligible for the foreign earned income exclusion under Code Sec. 911(a) because her abode was in the United States during the relevant period. The court also held that the resulting underpayment of tax was not due to reasonable cause and the taxpayer did not act in good faith with respect to the underpayment of tax because, although she used a commercial tax preparation website which determined she was eligible for the exclusion, it was unclear to the court what questions the website asked the taxpayer, what answers she gave in response, or whether the taxpayer was communicating with an actual person or an automated process. Haskins v. Comm'r, T.C. Memo. 2019-87.


Janice Haskins retired from the U.S. Army in 2011. Immediately before her retirement, Haskins had been stationed in Afghanistan working in Army intelligence. When Haskins retired from the Army in September 2011, her husband, Julian, and the couple's two children were living in the family home in Arizona. After retiring, Ms. Haskins traveled from Afghanistan to Arizona where her family lived.

In September 2011, Ms. Haskins began working for Science Applications International Corp. (SAIC). During a training assignment, she attended a tax briefing by SAIC. One of the subjects of the tax briefing was the foreign earned income exclusion under Code Sec. 911. In October of 2011, Ms. Haskins began working for SAIC in Afghanistan. She lived and worked on U.S. military bases. She spent all of her time on the bases and was not allowed to leave the bases. Her food and lodging in Afghanistan were supplied by the U.S. government. She paid to have cellular phone and internet service in Afghanistan. She had an Army Post Office mailing address while in Afghanistan that she used to send and receive mail. She kept her U.S. bank account while in Afghanistan. Her SAIC paychecks were deposited into this account. While in Afghanistan, she remained registered to vote in Arizona. Ms. Haskins' family did not have the option of moving to Afghanistan with her.

In June 2012, Ms. Haskins emailed a SAIC employee to ask about the tax implications of returning early to the United States, stating that she had recently learned that her mother had cancer. Eric Studnicki, a SAIC program manager, responded that Ms. Haskins was "not eligible for tax free status until you hit the 330 day mark" in Afghanistan.

In August 2012, Mr. Haskins moved from Arizona to Florida. He was accompanied by the Hasksinses' daughter and the household goods. The Haskinses' son remained in Arizona. In November 2012, Ms. Haskins left her job at SAIC. She traveled from Afghanistan to Arizona, where the Haskinses' son was, then to Florida to live in the family home.

Ms. Haskins prepared the Haskinses' joint tax returns for 2011 and 2012. On each return, Ms. Haskins reported that she was eligible to exclude her income from SAIC under the foreign earned income exclusion. Each return reported that Ms. Haskins had been in a foreign country at least 330 days of a 12 month period. The Haskins' 2012 return also claimed a deduction for $6,109 of unreimbursed employee business expenses, consisting of union dues, uniforms and tolls for work, job supplies, travel expenses, and meals and entertainment.

In July 2015, the IRS mailed the Haskinses a notice of deficiency for 2011 and 2012 making various adjustments to the income and deductions reported on their returns, including the denial of the foreign earned income exclusion. The notice also determined that the Haskinses were liable for accuracy-related penalties under Code Sec. 6662(a) for negligence or disregard of rules or regulations or substantial understatements of income tax for 2011 and 2012. The Haskinses challenged the notice in the Tax Court.

Code Sec. 911(a) allows a qualified individual to elect to exclude foreign earned income from gross income for any tax year. Under Code Sec. 911(d)(1), a qualified individual is an individual whose tax home is in a foreign country and who was either a resident of the foreign country or was present in the foreign country for 330 days during 12 consecutive months. Code Sec. 162(a)(2) provides that a taxpayer's home is generally the vicinity of the taxpayer's principal place of employment and not where the taxpayer's personal home is located. An individual is not treated as having a tax home in a foreign country for any period in which his or her abode is within the United States. In Code Sec. 911 cases, the Tax Court has compared a person's domestic ties with his or her ties to the foreign country in which he or she claims a tax home in order to determine whether his or her abode was in the United States during a particular period.

Code Sec. 6662(a) imposes a 20 percent penalty on an underpayment attributable to a substantial understatement of income tax and negligence or disregard of rules or regulations. Under Code Sec. 6664(c)(1), the penalty does not apply if the taxpayer had reasonable cause for the underpayment and acted in good faith. To establish reasonable cause and good faith through reliance on professional advice, the taxpayer must show (1) that the adviser was a competent professional with sufficient expertise to justify reliance, (2) the taxpayer provided necessary and accurate information to the adviser, and (3) the taxpayer actually relied in good faith on the adviser's judgment.

The Haskinses argued that the penalty should not apply to any underpayment because they had reasonable cause and relied in good faith on professional advice. They argued that at the SAIC tax briefing, Ms. Haskins was told that she needed to satisfy only the 330-day test to qualify for the foreign earned income exclusion, and the email from Studnicki confirmed that Ms. Haskins was entitled to the exclusion. They also contended that when Ms. Haskins used the website to prepare the couple's 2011 return, the website asked her questions about her eligibility to claim the foreign earned income exclusion and determined that she was eligible.

Tax Court's Analysis

The Tax Court held that Ms. Haskins' abode was in the United States during the relevant period, and that she therefore did not have a foreign tax home and was not a qualified individual eligible for the foreign earned income exclusion.

The court found that Ms. Haskins had strong ties to the United States during the relevant period, noting that her husband and two children lived in the family home in Arizona until August 2012 and in Florida after that. In the court's view, although Ms. Haskins had lived in Afghanistan during a portion of her time with the Army and then from October 2011 through November 2012 while working for SAIC, she did not have strong nonwork ties to Afghanistan. The court observed that while working for SAIC, she worked and lived on forward operating bases which were often under attack, and she was not permitted to leave the bases. The court also noted that when her mother was diagnosed with cancer, Ms. Haskins returned to the United States.

The Tax Court also upheld the imposition of penalties because it concluded that the Haskinses did not have reasonable cause for, or act in good faith with respect to, claiming the foreign earned income exclusion. The court found that Ms. Haskins did not prove that her participation in the SAIC tax briefing justified the conclusion that she made a reasonable attempt to comply with the provisions of Code Sec. 911 because it was unclear whether the persons who gave the tax briefing were knowledgeable enough to give tax advice or knew facts specific to Ms. Haskins. The court found that the email from Studnicki did not say the 330-day requirement was the only requirement for claiming the exclusion and there was no reason to think Studnicki was qualified to give tax advice anyway.

The court also found that the Haskinses failed to prove that Ms. Haskins's communications with the website justified the conclusion that she made a reasonable attempt to comply with the requirements of Code Sec. 911. According to the court, although the website asked questions about Ms. Haskins' eligibility and determined that she was eligible for the exclusion, Ms. Haskins did not say what questions were posed by the website, what answers she gave in response, or what specific advice the website supplied. The court further noted that it was unclear whether Ms. Haskins communicated with an actual person or with an automated process. Thus, in the court's view, the Haskinses did not prove that any of the communications were made by a knowledgeable, experienced adviser, that they gave all the information necessary to evaluate entitlement to the exclusion, or that anyone actually arrived at the judgment or gave the opinion that Ms. Haskins was entitled to the foreign earned income exclusion.

The Tax Court upheld a portion of the Haskins' business expense deductions, but disallowed most of the expenses as either capital expenses that gave rise to depreciation deductions over multiple years or expenses that were nondeductible due to lack of substantiation.

For a discussion of individuals qualified for the foreign earned income exclusion, see Parker Tax ¶78,610. For a discussion of the deduction for unreimbursed employee expenses before 2018 and after 2025, see Parker Tax ¶85,105. For a discussion of abatement of penalties due to reasonable cause and acting in good faith, see Parker Tax ¶262,127.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

Parker Tax Pro Library - An Affordable Professional Tax Research Solution.

Professional tax research

We hope you find our professional tax research articles comprehensive and informative. Parker Tax Pro Library gives you unlimited online access all of our past Biweekly Tax Bulletins, 22 volumes of expert analysis, 250 Client Letters, Bob Jennings Practice Aids, time saving election statements and our comprehensive, fully updated primary source library.

Parker Tax Research

Try Our Easy, Powerful Search Engine

A Professional Tax Research Solution that gives you instant access to 22 volumes of expert analysis and 185,000 authoritative source documents. But having access won’t help if you can’t quickly and easily find the materials that answer your questions. That’s where Parker’s search engine – and it’s uncanny knack for finding the right documents – comes into play

Things that take half a dozen steps in other products take two steps in ours. Search results come up instantly and browsing them is a cinch. So is linking from Parker’s analysis to practice aids and cited primary source documents. Parker’s powerful, user-friendly search engine ensures that you quickly find what you need every time you visit Our Tax Research Library.

Parker Tax Research Library

Dear Tax Professional,

My name is James Levey, and a few years back I founded a company named Kleinrock Publishing. I started Kleinrock out of frustration with the prohibitively high prices and difficult search engines of BNA, CCH, and RIA tax research products ... kind of reminiscent of the situation practitioners face today.

Now that Kleinrock has disappeared into CCH, prices are soaring again and ease-of-use has fallen by the wayside. The needs of smaller firms and sole practitioners are simply not being met.

To address the problem, I’ve partnered with a group of highly talented tax writers to create Parker Tax Publishing ... a company dedicated to the idea that comprehensive, authoritative tax information service can be both easy-to-use and highly affordable.

Our product, the Parker Tax Pro Library, is breathtaking in its scope. Check out the contents listing to the left to get a sense of all the valuable material you'll have access to when you subscribe.

Or better yet, take a minute to sign yourself up for a free trial, so you can experience first-hand just how easy it is to get results with the Pro Library!


James Levey

Parker Tax Pro Library - An Affordable Professional Tax Research Solution.

    ®2012-2019 Parker Tax Publishing. Use of content subject to Website Terms and Conditions.

IRS Codes and Regs
Tax Court Cases IRS guidance