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other fixed place of business of that individual. Sec.
864(c)(4)(B); sec. 1.864-7(b)(1), Income Tax Regs. There is no
evidence petitioner meets this requirement. Second, for income
received by an individual from sources without the United States
to be effectively connected with a U.S. trade or business, it
must be income from one of the following categories: Rents,
royalties, dividends, interest, or the sale or exchange of
personal property. Sec. 864(c)(4)(B). Although the term “trade
or business” can refer to income from the performance of personal
services, sec. 863(b), that category of income is not listed in
section 864(c)(4)(B).
Thus, application of principles governing whether income is
effectively connected with a trade or business does not result in
sourcing more of petitioner’s income in American Samoa that the
amount discussed above in paragraph C-5.
7. Conclusion
We conclude that income earned by petitioner in 1995, 1996,
and 1997 from the performance of personal services in
international waters is not excluded from U.S. tax by section
931(a).
D. Petitioner’s State Tax Payments and Refunds
Gross income does not include income attributable to the
recovery during the taxable year of any amount deducted in any
prior taxable year to the extent such amount did not reduce the
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