Internal Revenue Service filed a proof of claim in debtor's bankruptcy case for non-payment of income taxes. Debtor objected, asserting that during the tax years in question, pursuant to 26 U.S.C. § 911(a), he met all the prerequisites to exclude the income from taxation as "foreign earned income." On cross motions for summary judgment, the parties stipulated that the only bar to debtor's use of the foreign earned income exclusion was whether debtor's employer, the Army Recreation Machine Program, was an "agency" for the United States for the purposes of 26 U.S.C. § 911(a).
The United States Bankruptcy Court, Duncan W. Keir, J., held that the United States Army exercised pervasive financial and supervisory control over the Army Recreation Machine Program, causing it to accomplish Army purposes, on a nonprofit basis, for persons directly or indirectly affiliated with the Army, such that it was an agency of the Army and the United States for purposes of 26 U.S.C. § 911(a). Debtor's motion for summary judgment denied, and the motion of the United States granted.