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On Schedule A, Itemized Deductions, attached to his Form
1040NR, petitioner claimed “Other Miscellaneous Deductions”,
pertaining to his co-op, in the amount of $9,336 (rounded). On
his Schedule A, petitioner listed the breakdown of these
deductions as real estate taxes of $1,920.16, mortgage interest
of $215.77, and “incurred expenses of $7,200 including
companionship” totaling $9,335.93. Respondent denied
petitioner’s claimed deductions in full.
Section 873(a) provides, in relevant part, that “In the case
of a nonresident alien individual, the deductions shall be
allowed only for purposes of section 871(b) * * * if * * * they
are connected with income which is effectively connected with the
conduct of a trade or business within the United States”.
Respondent in the notice of deficiency determined that
petitioner’s rental income was effectively connected with the
conduct of a business within the United States.
The claimed Schedule A deductions pertain to petitioner’s
co-op. Petitioner admitted that he resided in his co-op while he
was in the United States during 1999. Petitioner claimed that he
managed his rental property from his co-op. Petitioner paid
$401.50 per month to the co-op for mortgage and maintenance fees
for a total of $4,818. Petitioner admitted at trial that the
$2,382 difference between the $7,200 claimed deduction and the
$4,818 in co-op mortgage and maintenance fees was for telephone
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Last modified: May 25, 2011