Golfer Retief Goosen, a nondomiciliary UK resident, entered into endorsement agreements with various corporate sponsors, and other agreements to provide services for those sponsors. The IRS challenged Goosen’s characterization of payments under those agreements, raising issues of personal services income, royalty income, source of income, and taxation under the U.S. – U.K. income tax treaty.
These issues arise often for athletes and international artists. Many of the characterization issues are factual and difficult to apply. The Tax Court ultimately disagreed with several of Goosen’s positions and increased his U.S. income taxes.
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