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standard deduction (which exceeds the itemized deductions
substantiated by petitioner), and a deduction for half of his
self-employment taxes.
Discussion
Section 861
Petitioner’s first and, apparently, primary argument
concerns his “confusion” about the “requirements” of section 861,
Income From Sources Within the United States. According to
petitioner, in a West publication that he read, section 61 cross
referenced section 861, and he is therefore “required” to
consider it. While the Court suspects that petitioner’s
“confusion” is disingenuous, the Court will, for his present and
future benefit, explain the operation of section 861.
It seems strange that petitioner feels compelled to delve
into the intricacies of section 861 as that section, along with
those immediately following, are aimed at the U.S. income tax
effects of international activities. Section 861(a) provides a
rule for determining whether items of gross income are from
sources within the United States (U.S. source). Section 862
provides the sourcing rules for items of gross income from
sources without the United States (foreign source). Under
section 863, items of gross income, expenses, losses and
deductions other than those specified in sections 861 and 862
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