- 3 - 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 862Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011