                    T.C. Summary Opinion 2007-156



                        UNITED STATES TAX COURT



            MEHRDAD HAMZEYE LANGROUDI, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 9489-06S.                Filed September 5, 2007.



     Mehrdad Hamzeye Langroudi, pro se.

     James H. Harris, Jr., for respondent.



     RUWE, Judge:     This case was heard pursuant to the provisions

of section 74631 of the Internal Revenue Code in effect when the

petition was filed.    Pursuant to section 7463(b), the decision to




     1
       Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
                                  - 2 -

be entered is not reviewable by any other court, and this opinion

shall not be treated as precedent for any other case.

     Respondent determined deficiencies in petitioner’s Federal

income taxes and accuracy-related penalties under section 6662(a)

as follows:2

                                          Accuracy-related Penalty
         Year        Deficiency                  Sec. 6662(a)

         2002            $7,165                  $1,433.00
         2003            11,846                   2,369.20

     After concessions,3 the issues we must decide are:      Whether

petitioner’s wage income from residencies in anesthesiology in

2002 and 2003 was exempt from Federal income tax pursuant to the

tax convention between the United States and Belgium (the treaty)

and whether petitioner is liable for accuracy-related penalties

under section 6662(a).




     2
       Respondent subsequently issued a Form 4549, Supplement to
the Notice of Deficiency (supplement), which reflects a reduction
in the determined 2002 and 2003 to $6,625 and $9,071,
respectively. As a result of the reduced deficiency
determinations, the supplement reduces the determined 2002 and
2003 penalties to $1,325 and $1,814.20, respectively.
     3
       The parties stipulated that petitioner received unreported
dividend and interest income in 2002 and 2003. Anesthesiology
Associates of Boro Park, L.L.P., paid petitioner $5,700 in
miscellaneous income during 2003. As a result, respondent
determined that petitioner was liable for self-employment tax.
Petitioner did not dispute respondent’s determination that he was
liable for self-employment tax on nonemployee compensation in
2003.
                                - 3 -

                             Background

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the attached exhibits are

incorporated by this reference.    When the petition was filed,

petitioner resided in Newport News, Virginia.4    Petitioner is a

citizen of the Kingdom of Belgium (Belgium); however, he has

resided in the United States from June of 2001 through the

present.

     On July 1, 2001, petitioner began a 1-year residency in

internal medicine at Fairview Hospital, a Cleveland Clinic

hospital, and he completed it on June 30, 2002.    Fairview

Hospital paid petitioner wages of $19,995.90 in 2002.

     Petitioner began a residency in anesthesiology at Maimonides

Medical Center on July 1, 2002, and he completed it on June 30,

2005.    Maimonides Medical Center paid petitioner wages of

$23,726.77 in 2002 and $49,033.12 in 2003.    In addition,

University Group Medical Associates paid petitioner wages of

$10,290 in 2003.

     Petitioner filed a 2002 Form 1040NR, U.S. Nonresident Alien

Income Tax Return, in which he reported wages of $43,721 as

“income exempt by a treaty”.    On his return, petitioner listed

his occupation in the United States as “Anesthesia Trainee”.

Respondent subsequently requested that petitioner provide


     4
         Petitioner resided in New Jersey at the time of trial.
                                - 4 -

information concerning his claim that his income was exempt from

Federal income tax.    In response, petitioner submitted a second

2002 Form 1040NR and attached a photocopied article regarding the

treaty that exempts particular Belgian residents, who are

temporarily in the United States, from U.S. income tax in certain

circumstances.   On this second Form 1040NR, petitioner listed his

occupation in the United States as “Anesthesia trainee in

training”.

     Petitioner filed a 2003 Form 1040NR in which he reported

wages of $59,323 and miscellaneous income of $5,700 as “income

exempt by a treaty”.    He listed his occupation in the United

States as “Anesthesia Trinee [sic]”.

     On February 22, 2006, respondent issued to petitioner a

notice of deficiency for the 2002 and 2003 tax years in which he

explained that “Maimonides Medical Center and Fairview Hospital

are not universities or other ‘recognized educational

institution(s).’   The income you received is not exempt from U.S.

income tax under Article 20 of the income tax treaty between

Belgium and the United States.”   Respondent issued to petitioner

a Form 4549, Supplement to the Notice of Deficiency (supplement),

asserting adjustments that decreased petitioner’s deficiencies

and section 6662(a) penalties from what was determined in the

notice of deficiency.    In the supplement, and pursuant to article

21 of the treaty, respondent asserted that the first $2,000 of
                               - 5 -

petitioner’s earned income for 2002 and 2003 is exempt from U.S.

income tax.   The supplement also explains the reason for

respondent’s determination regarding petitioner’s claim that all

of his wages were exempt from income tax.   In the supplement,

respondent states:

     Article 20 of the treaty between the United States and
     Belgium allows residents of Belgium to exempt from
     United States taxation income received for the primary
     purpose of teaching or engaging in research, or both,
     from a university or other recognized educational
     institution for a period of 2 years from the date of
     arrival if invited by the United States Government or
     of a university or other recognized educational
     institution.

     You did not show that you were invited to work for the
     primary purpose of teaching or research. You stated on
     your 2002 income tax return that your occupation was
     ‘Anesthesia Trainee’, and that your purpose for coming
     to the United States was for ‘Training (Medical
     Specialty) [sic]. On May 30, 2003 we received your
     signed response to our request for additional
     information regarding your 2002 claim for treaty
     benefits. Your response included a work phone number
     at Maimonides Medical Center for Resident Training,
     which shows that you were still in residency training
     as of that date. That shows that you were not in the
     United States for the primary purpose of teaching or
     research in 2003. The certificates you provided from
     Fairview Hospital and Maimonides Medical Center show
     that you were in the United States as a resident in
     Internal Medicine and Anesthesiology, which means your
     primary purpose was residency, not teaching or
     research.

     Based on the above facts, the income you received is
     not exempt from U.S. income tax under Article 20 of the
     income tax treaty between Belgium and the United
     States.

     Article 21 of the treaty allows you to exempt up to
     $2000 of earned income per year for the first five tax
     years you are present in the US for training if you
                               - 6 -

     were a resident of Belgium prior to coming to the US.
     Since you meet those requirements, the first $2000 of
     your earned income for 2002 and 2003 is exempt from US
     income tax, as shown above.

Petitioner timely filed a petition with this Court.

                            Discussion

     Petitioner argues that all of his 2002 and 2003 wage income

from his residencies at Fairview Hospital and Maimonides Medical

Center is exempt from taxation pursuant to article 20 of the

treaty.   Articles 20 and 21 of the treaty provide:

                            Article 20
                             TEACHERS

          (1) An individual who is a resident of one of the
     Contracting States at the time he becomes temporarily
     present in the other Contracting State and who, at the
     invitation of the Government of that other Contracting
     State or of a university or other recognized
     educational institution in that other Contracting State
     is temporarily present in that other Contracting State
     for the primary purpose of teaching or engaging in
     research, or both, at a university or other recognized
     educational institution shall be exempt from tax by
     that other Contracting State on his income from
     personal services for teaching or research at such
     university or educational institution, for a period not
     exceeding 2 years from the date of his arrival in that
     other Contracting State.

          (2) This article shall not apply to income from
     research if such research is undertaken not in the
     public interest but primarily for the private benefit
     of a specific person or persons.

                             Article 21
                       STUDENTS AND TEACHERS

          (1)(a) An individual who is a resident of one of
     the Contracting States at the time he becomes
     temporarily present in the other Contracting State and
                                - 7 -

     who is temporarily present in that other Contracting
     State for the primary purpose of:

                 (i) Studying at a university or other
            recognized educational institution in that other
            Contracting State, or

                 (ii) Securing training required to qualify
            him to practice a profession or professional
            specialty, or

                 (iii) Studying or doing research as a recipient of
            a grant, allowance, or award from a governmental,
            religious, charitable, scientific, literary, or
            educational organization,

     shall be exempt from tax by that other Contracting
     State with respect to amounts described in subparagraph
     (b) for a period not exceeding 5 taxable years from the
     date of his arrival in that other Contracting State.

            (b) The amounts referred to in subparagraph (a)
     are:

                 (i) Gifts from abroad for the purpose of his
            maintenance, education, study, research, or
            training;

                 (ii) The grant, allowance, or award; and

                 (iii) Income from personal services performed
            in that other Contracting State in an amount not
            in excess of 2,000 United States dollars or its
            equivalent in Belgian francs for any taxable year.

Convention for the Avoidance of Double Taxation and the

Prevention of Fiscal Evasion with Respect to Taxes on Income,

U.S.-Belg., arts. 20-21, July 9, 1970, 23 U.S.T. 2687.

     In order to meet the requirements of article 20 of the

treaty, petitioner would have to be “temporarily present in * * *

[the U.S.] for the primary purpose of teaching or engaging in

research”.    Petitioner argues that he accepted his residencies
                                  - 8 -

because he was offered the opportunity to research, teach, and

receive additional training in a subspecialty that he considered

important and useful.

     At trial, respondent called Dr. Ketan Shevde, who was

chairman of anesthesia at Maimonides Medical Center in 2002 and

2003, to testify as to the primary purpose of petitioner’s

residency.      Dr. Shevde testified as follows:

     [Respondent’s Counsel]: What was the petitioner hired
     to do while at Maimonides?

     [Dr. Shevde]: He was hired to do training in
     anesthesiology for three years.

     Q: Did you hire the petitioner, or did Maimonides hire
     the petitioner as a teacher?

     A:   No

     Q:   Did they hire the petitioner as a researcher?

     A:   No.

Dr. Shevde went on to say that, although teaching and research

are part of a resident’s function, the “emphasis really is on

teaching residents how to give anesthesia and to become

anesthesiologists at the end of the training.”     Finally, Dr.

Shevde summarized his testimony by stating as follows:

          The primary purpose [of a residency in
     anesthesiology] is to train residents to give
     anesthesia, and to become consultants in
     anesthesiology, and to pass the boards that are given
     by the American Board of Anesthesiology at the end of
     their training.
                                - 9 -

          That includes some amount of research, and it also
     includes some amount of teaching, but those are minor
     roles compared to the major role, which is that of
     becoming an anesthesiologist.

     Dr. Shevde’s testimony clearly demonstrates that the primary

purpose of petitioner’s residency was to train in anesthesiology,

rather than to teach or to perform research.    Petitioner,

himself, listed his occupation as an Anesthesia Trainee on all

three of the tax returns filed for 2002 and 2003.    Given

petitioner’s testimony that both Fairview Hospital and Maimonides

Medical Center were “basically and fundamentally * * * no

different” from each other with respect to achieving objectives

for themselves, residents, teachers, and researchers, it is clear

that article 20 of the treaty is inapplicable to petitioner’s

residencies.5

     With respect to the accuracy-related penalty under section

6662(a), the Commissioner has the burden of production.      Sec.

7491(c).    To prevail, the Commissioner must produce sufficient

evidence that it is appropriate to apply the penalty to the

taxpayer.    Higbee v. Commissioner, 116 T.C. 438, 446 (2001).

Once the Commissioner meets his burden of production, the



     5
       As previously explained, the deficiencies for which
respondent argues, and the basis for respondent’s determinations
were not fully set forth until respondent supplemented his notice
of deficiency. Since the evidence presented by the parties
clearly establishes that the primary purpose of petitioner’s
residencies was to train in anesthesiology, we have no reason to
decide which party would bear the burden of proof.
                                - 10 -

taxpayer bears the burden of supplying sufficient evidence to

persuade the Court that the Commissioner’s determination is

incorrect.    Id. at 447.

     Section 6662(a) provides an accuracy-related penalty equal

to 20 percent of the underpayment required to be shown on a

return due to negligence or disregard of rules or regulations.

Sec. 6662(b)(1).    For purposes of section 6662, the term

“negligence” includes “any failure to make a reasonable attempt

to comply with the provisions of * * * [the Code], and the term

‘disregard’ includes any careless, reckless, or intentional

disregard.”    Sec. 6662(c).   “Negligence” also includes any

failure by a taxpayer to keep adequate books and records or to

substantiate items properly.     Sec. 1.6662-3(b), Income Tax Regs.

     An accuracy-related penalty is not imposed with respect to

any portion of the underpayment as to which the taxpayer acted

with reasonable cause and in good faith.     Sec. 6664(c)(1); see

Higbee v. Commissioner, supra at 448.     This determination is made

based on all the relevant facts and circumstances.     Higbee v.

Commissioner, supra at 448; sec. 1.6664-4(b)(1), Income Tax Regs.

“Relevant factors include the taxpayer’s efforts to assess his

proper tax liability, including the taxpayer’s reasonable and

good faith reliance on the advice of a professional such as an

accountant.”    Higbee v. Commissioner, supra at 448-449.
                             - 11 -

     Petitioner filed his 2002 and 2003 income tax returns and

reported all of his income from wages.   At the time of filing,

petitioner was new to this country and unfamiliar with the U.S.

tax system, let alone the intricacies of the tax convention

between the United States and Belgium.   Even respondent had

difficulty applying the treaty to petitioner’s situation, as

evidenced by the necessity of issuing a supplement to his

original notice of deficiency.   We hold that petitioner is not

liable for the accuracy-related penalties under section 6662.

     To reflect the foregoing,


                                         Decision will be entered

                                    under Rule 155.
