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Kutak Rock Secures Reversal of State Disallowance of Foreign Earned Income Exclusion

News | July 12, 2017

Kutak Rock recently obtained a reversal from the Idaho Board of Tax Appeals of the State Tax Commission’s decision regarding an individual who had been employed overseas on a construction project. Despite the Internal Revenue Service allowing the individual’s foreign income exclusion under Section 911 of the Internal Revenue Code, the Idaho State Tax Commission disallowed it for purposes of Idaho state income taxes and assessed taxes, penalties and interest for the tax years at issue.

Following a hearing, the Board found that the individual had satisfied the test for bona fide residency in a foreign country, and granted his foreign earned income exclusion for the tax years at issue.

Lucy Newberry leads the firm’s state and local tax practice. She assists numerous companies in managing interactions with the Internal Revenue Service and has worked with clients on tax matters from all 50 states and a number of foreign jurisdictions.