TP did not file in 2002 and 2003; IRS, through Collections, prepared returns for him. TP responded by excluding foreign earned income. Under section 911, this election must be made on a timely filed return, unless the effect of the election is to reduce the gross tax to zero. Tp's returns reduced the NET tax to zero; Collections accepted the exclusion. In 2004, same situation, but this time, the case is handled by IRS Exam. Exam says 'no go': the determining issue is the gross tax. What are you views on the allowability or not of the original election?
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Idiots
You would think IRS has better things to do.
And the federal government has bigger problems. Let's worry less about excluding foreign income, and more about excluding foreign arrivals with tuberculosis.
For one thing, Section 911 says
>>(e) Election
(1) In general
An election under subsection (a) shall apply to the taxable year for which made and to all subsequent taxable years unless revoked under paragraph (2).<<
So if he has already made the election on an earlier return that has been accepted, there's no "election" issue. He's home free. IRS might make some argument that "well, we never should have done that." Then the taxpayer can make some sort of estoppel argument.
I'm not sure what you mean by "Gross Tax" and "Net Tax." Do you mean there are payments and withholding that exceed the tax liability, which is not zero?
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