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Petitioner did not file a Form W-8, Certificate of Foreign
Status, that is normally required in order to qualify interest
received by a nonresident of the United States for nontaxable
treatment under section 871(h).
During 1988 and 1989, petitioner received $8,414 and
$106,682, respectively, in dividend income with regard to the
above $1,015,489 mutual fund investment. Because petitioner had
provided her Social Security number to the mutual fund and
because petitioner had not provided a Form W-8 to the mutual
fund, the mutual fund treated petitioner as a U.S. resident and
filed with respondent Forms 1099-INT and DIV reflecting the
interest and dividend income paid to petitioner in 1988 and 1989.
For 1988 and 1989, petitioner did not file Federal income
tax returns. For 1988 and 1989, respondent prepared
substitute income tax returns on petitioner's behalf using
information set forth in the Forms 1099-INT and DIV that were
filed with respondent by the mutual fund.
On the substitute income tax returns, respondent treated
petitioner as a U.S. resident and calculated the tax owed by
petitioner based on tax rates applicable to U.S. residents.
Respondent treated the interest and dividend income that
petitioner received in 1988 and 1989 as taxable, and respondent
used the standard 20-percent backup withholding rate in
calculating petitioner's tax liability for each year. On brief,
respondent concedes that the interest income that petitioner
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