Bart wrote:

- quote -

The $80,000 is the maximum exclusion and applies only if you
qualify on every day of the year. Otherwise, it is
allocated on a daily basis. So, for a six month stay, the
maximum allowable exclusion is only $40,000.

Lanny Williams, CPA
Nawarat, Williams & Co
Income Tax Services for Expatriate Americans

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Bart wrote:

- quote -

You are into the "facts and circumstances" set of rules. I
believe the key words in your quotation are "You also must
be able to show that you reasonably could have expected to
meet the minimum time requirements if not for the adverse
conditions." This just might be a pretty hard wall to climb
given that the conditions in Iraq have been adverse from day
one.

--
Alan
http://taxtopics.net

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- quote -

But lets say, in Iraq, you come back to the states after 6
months and stay in the States more than 30 days. Would you
still get the $80,000 tax exemption (because of the
war/fighting in Iraq)?

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Bart wrote:

- quote -

In Notice 2003-52 the IRS said:

In recent months, OFAC (U.S. Treasury's Office of Foreign
Assets Control) has issued several specific and general
licenses that authorize individuals to engage in
transactions related to travel to Iraq or to activities
within Iraq. Pursuant to the terms of the Iraqi Sanctions
Regulations, individuals whose activities in Iraq are
permitted by a specific or general license issued by OFAC
are not in violation of the Iraqi Sanctions Regulations with
respect to the activities permitted by the license. 31
C.F.R. sec. 575.501(c). Accordingly, under section
911(d)(8)(C) of the Code, the limitations of section
911(d)(8)(A) do not apply to such individuals with respect
to such licensed activities. Such individuals are eligible
for the exclusion under section 911 of the Code provided
that they meet the other requirements of that section.

So... the income exclusion is available to a worker in Iraq as
long as the employment has been authorized by OFAC.

--

Alan
http://taxtopics.net

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How does Iraq fit into this?

http://www.irs.gov/publications/p54/ch04.html#d0e3122

Physical Presence Test

You meet the physical presence test if you are physically
present in a foreign country or countries 330 full days
during a period of 12 consecutive months. The 330 days do
not have to be consecutive. Any U.S. citizen or resident can
use the physical presence test to qualify for the exclusions
and the deduction.

The physical presence test is based only on how long you
stay in a foreign country or countries. This test does not
depend on the kind of residence you establish, your
intentions about returning, or the nature and purpose of
your stay abroad. 330 full days. Generally, to meet the
physical presence test, you must be physically present in a
foreign country or countries for at least 330 full days
during a 12-month period. You can count days you spent
abroad for any reason. You do not have to be in a foreign
country only for employment purposes. You can be on vacation
time.

You do not meet the physical presence test if illness,
family problems, a vacation, or your employer's orders cause
you to be present for less than the required amount of time.

Exception. You can be physically present in a foreign
country or countries for less than 330 full days and still
meet the physical presence test if you are required to leave
a country because of war or civil unrest. See Waiver of Time
Requirements, later.

____________________________

Waiver of Time Requirements

Both the bona fide residence test and the physical presence
test contain minimum time requirements. The minimum time
requirements can be waived, however, if you must leave a
foreign country because of war, civil unrest, or similar
adverse conditions in that country. You also must be able to
show that you reasonably could have expected to meet the
minimum time requirements if not for the adverse conditions.
To qualify for the waiver, you must actually have your tax
home in the foreign country and be a bona fide resident of,
or be physically present in, the foreign country on or
before the beginning date of the waiver.

Early in 2004, the IRS will publish in the Internal Revenue
Bulletin a list of countries qualifying for the waiver for
2003 and the effective dates. If you left one of the
countries on or after the date listed for each country, you
can qualify for the bona fide residence test or physical
presence test for 2003 without meeting the minimum time
requirement. However, in figuring your exclusion, the number
of your qualifying days of bona fide residence or physical
presence includes only days of actual residence or presence
within the country.

reply here please

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