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undermines petitioners’ contentions that their income would be
doubly taxed if they were to pay taxes on the proceeds from that
sale in the United States.
Petitioners failed to corroborate their testimony by any
documentary evidence. They attempted to introduce several
documents in Spanish, which allegedly would have confirmed the
existence of a contract between petitioner and his brother for
the sale of the market, as well as petitioners’ written
communications with the Mexican Government in connection with
that sale and other tax-related matters. Because petitioners
failed to properly translate and authenticate the documents in
question, despite the Court’s order to do so, they were barred
from using them at trial.
Aside from petitioners’ failure to substantiate their
contentions with respect to the foreign source of the unreported
income, their reliance on the Treaty to avoid the U.S. tax is
misguided. By filing a joint Federal income tax return for 1998,
petitioners in effect admitted that neither of them was a
nonresident alien during the year in question. See sec.
6013(a)(1). To the extent petitioners contend that they were not
U.S. residents during 1998, they presented no evidence to that
effect. Consequently, by virtue of the Treaty, petitioners are
entitled to no exemption from U.S. tax, but only to a foreign tax
credit for income taxes paid to the Mexican Government.
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Last modified: May 25, 2011