D.C. Circuit rejects per-bet approach for nonresident alien
By Charles J. Reichert, CPA, October 2013
http://www.journalofaccountancy.com/Issues/2013/Oct/TaxMatters.htm
A full read of the article is worth your time – but a highlight of the key facts of the case are set out below as excerpted from the article:
Sang J. Park, a South Korean national and citizen, played slot machines recreationally in the United States in 2006 and 2007, winning $431,658 and $103,874, respectively (but also losing more than that each year). Park did not report those winnings on his 2006 and 2007 federal income tax returns. After the IRS issued deficiency notices for both years, the taxpayer petitioned the Tax Court for relief. The Tax Court held the income was taxable to the United States because an existing treaty between the United States and South Korea did
not exempt the gambling winnings of South Korean citizens from U.S. tax and the income was not effectively connected with a U.S. trade or business. The taxpayer appealed the decision to the D.C. Circuit.