UNITED STATES TAX COURT

CZ

145 T.C. No. 14

UNITED STATES TAX COURT

USMAN BHUTTA, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 26940-13.

Filed December 22, 2015.

P, a citizen of Pakistan and a foreign medical school graduate,

entered the United States in 2009 to participate in an internal

medicine residency training program. During the three-year

residency training program, for which P received an annual salary, P

treated patients, with supervision; conducted and presented research;

and supervised and trained third- and fourth-year medical students.

P's supervising and training of medical students consisted of having

the medical students observe him during "rounds", preparing the

students for monthly examinations, and evaluating the students

monthly.

For taxable year 2010 P reported his wages from the residency

training program as exempt from U.S. income tax under the

Convention for the Avoidance of Double Taxation and the Prevention

of Fiscal Evasion With Respect to Taxes on Income, U.S.-Pak., art.

XII, July 1, 1957, 10 U.S.T. 984 (entered into force May 21, 1959)

(hereinafter treaty). Treaty art. XII exempts from U.S. income tax

remuneration that a professor or teacher receives for teaching if the

SERVED Dec 22 2015

-2professor or teacher is a Pakistani resident who temporarily visits the

United States "for the purpose of teaching for a period not exceeding

two years at a university, college, school or other educational

institution" in the United States.

R subsequently issued P a notice of deficiency disallowing the

claimed treaty exemption. P asserts that he is entitled to an

exemption under treaty art. XII or, alternatively, that he is entitled to

an exemption under treaty art. XIII(3). Treaty art. XIII(3) exempts

from income tax compensation up to $10,000 if a Pakistani resident,

temporarily present in the United States under arrangements with the

United States or any agency or instrumentality thereof solely for the

purpose of training, study, or orientation, receives such compensation

for the rendition of services directly related to such training, study, or

orientation.

I]eld: P was not in the United States for "the purpose of

teaching" in 2010 and therefore is not entitled to the exemption under

treaty art. XII.

IIeld, further, P is not entitled to the exemption under treaty art.

XIII(3) because P has not proven that he was in the United States

under arrangements with the United States or an agency or

instrumentality thereof.

Held, further, R's determination is sustained.

H. Craig Pitts, for petitioner.

William Franklin Castor and H. Elizabeth H. Downs, for respondent.

-3MARVEL, Judge: In a notice of deficiency, respondent determined a

$4,415 deficiency in petitioner's Federal income tax for taxable year 2010.

Petitioner timely petitioned this Court for redetermination of the deficiency. After

concessions,¹ the sole issue for decision is whether petitioner's wages earned as a

medical resident in 2010 are exempt from tax under article XII or article XIII(3) of

the Convention for the Avoidance of Double Taxation and the Prevention of Fiscal

Evasion With Respect to Taxes on Income, U.S.-Pak., July 1, 1957, 10 U.S.T. 984

(entered into force May 21, 1959) (United States-Pakistan Income Tax Convention

or treaty).

¹Respondent conceded his determination in the notice of deficiency that

petitioner had a taxable State tax refund of $762. This concession resulted in a

computational adjustment to petitioner's itemized deductions, and in a first

supplemental stipulation of facts the parties stipulated respondent's computation

of a reduced deficiency of $4,295. In addition to the explicit concessions, we

consider petitioner to have conceded his assertion in the petition that he is entitled

to a standard deduction for 2010. Petitioner failed to advance any arguments as to

this issue in his opening or answering brief. Accordingly, we deem the issue

abandoned. See Wilcox v. Commissioner, 848 F.2d 1007, 1008 n.2 (9th Cir.

1988), § T.C. Memo. 1987-225; Lunsford v. Commissioner, 117 T.C. 183, 187

(2001); Nicklaus v. Commissioner, 117 T.C. 117, 120 n.4 (2001).

-4FINDINGS OF FACT

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

facts are incorporated herein by this reference. Petitioner resided in Oklahoma

when he petitioned this Court.2

Petitioner was a citizen of Pakistan at all relevant times. At the time of trial

he lived with his wife, a Pakistani citizen whom he married in 2010, and his

daughter, who is a U.S. citizen. He has been a practicing physician on the

nephrology faculty of OU Physicians, a physicians group within the Oklahoma

University Health Sciences Center (university), since August 2014 after

completing a three-year residency training program and a fellowship there.

I.

Petitioner's Medical Background and Residency Training Program

In 2005 petitioner graduated from Allama Iqbal Medical College, University

of Punjab, Lahore, Pakistan, with a medical degree. To obtain the medical degree

petitioner completed five to six years of coursework and spent one year working in

a hospital.3

2Unless otherwise indicated, all section references are to the Internal

Revenue Code (Code) in effect for the year in issue, and all Rule references are to

the Tax Court Rules of Practice and Procedure.

3It is not clear whether petitioner practiced medicine in Pakistan before

entering the United States in 2009. During cross-examination petitioner answered

(continued...)

-5Petitioner believed that the medical training in the United States was "far

superior" to the training he received in Pakistan and decided to pursue a medical

residency in the United States. Before he could begin a residency training

program in the United States, however, petitioner had to pass the United States

Medical Licensing Examination (USMLE), a three-step examination for medical

licensure in the United States. He completed the first step and the clinical

knowledge portion of the second step in Pakistan on December 20, 2006, and

October 18, 2007, respectively. On December 4, 2007, petitioner was issued a

B-1/B-2 visa, which allowed him to enter the United States to take the clinical

skills portion of the second step of the USMLE. Petitioner completed the clinical

skills portion in the United States on January 30, 2008.

After passing steps 1 and 2 of the USMLE, petitioner was eligible for

certification from the Educational Commission for Foreign Medical Graduates

(ECFMG). ECFMG is an organization that certifies the qualifications of

3(...continued)

"Yes. After I did the one year training" to respondent's counsel's question "At the

point you graduated from medical school, did you become a medical doctor for

purposes of Pakistan?" However, petitioner stated on an unsigned Form 9250,

Questionnaire--Tax Treaty Benefits, see infra p. 12, that his occupation before

coming to the United States was "medical student". The record does not show

where petitioner was employed after obtaining the medical degree in 2005 and

before entering the United States in 2009. However, we infer from the record that

petitioner did not teach at a medical school in Pakistan.

-6international medical school graduates before they begin U.S. graduate medical

education. ECFMG certification is required before an international medical

school graduate may take step 3 of the USMLE, begin a U.S. residency training

program, and obtain an unrestricted license to practice medicine in the United

States. Petitioner obtained ECFMG certification on March 27, 2008, and he

completed the third step of the USMLE in the United States in January 2009.

While in the United States petitioner interviewed at various universities

seeking acceptance into an internal medicine residency training program. He

interviewed with the university and received by letter dated March 23, 2009, an

offer of appointment as a first-year internal medicine resident from the university's

department of internal medicine. The offer letter indicated that petitioner's start

date would be July 1, 2009, and that he would complete his "residency training"

on June 30, 2012. The letter also stated that petitioner would have the opportunity

to initiate training in a subspeciality during his second year of residency. The

residency position paid an annual salary of $45,666 for the first year, which

increased by approximately $1,000 "with each year of training." Petitioner

accepted the offer by signing the letter on March 28, 2009, and returning it to the

umversity.

-7Petitioner's acceptance of the university's offer was memorialized in a

contract entitled the University of Oklahoma College of Medicine Residency

Agreement, which petitioner and a university representative signed on August 11,

2009 (2009 agreement). The 2009 agreement covers only petitioner's first year of

residency and comprises four parts: Appointment; University Responsibilities;

Resident Responsibilities; and Reappointment, Promotion, and Termination.

Among the university's stated responsibilities is its obligation to provide a

"graduate medical education program" with "faculty oversight and supervision of

all educational and clinical activities". Resident responsibilities include

"fulfill[ing] the educational requirements of the training program" and using

"his/her best efforts to provide safe, effective and compassionate patient care".

Teaching medical students is not a stated resident responsibility.

Under the 2009 agreement a resident could be suspended without pay or

dismissed for failing to obtain an Oklahoma medical license within a prescribed

time. The 2009 agreement also states that continuation of the training program

requires annual renewals of appointment, which are not automatically offered but

rather are "offered yearly based upon meeting the performance standards of the

Program." Failure to satisfactorily complete training program requirements or

breaching institutional rules could result in "nonpromotion". A resident would not

-8know for certain whether he could continue in the program until the university

gave him a renewal contract.4

Before he could begin his residency training program, petitioner needed to

obtain a U.S. exchange visitor, or J-1, visa. ECFMG, as petitioner's sponsor,

issued him a Form DS-2019, Certificate of Eligibility for Exchange Visitor (J-1)

Status, which allowed him to go to a U.S. embassy to apply for and receive the

visa. See 22 C.F.R. sec. 62.2 (2010) (defining Form DS-2019). The Form DS2019 described petitioner as a "university post grad medical trainee", an "alien

physician", and a "research scholar" and was valid from August 10, 2009, to

August 9, 2010, to reflect the dates of the 2009 agreement.5

ECFMG had to renew the Form DS-2019 every year for petitioner to

continue in the residency training program. ECFMG's criteria for renewing a

Form DS-2019 were listed on its Web site and included a requirement that an

applicant provide proof of a renewed agreement with a university, a letter of good

standing from the director of the applicant's residency training program, and

4Petitioner was aware of other residents at the university whose contracts

were not renewed.

5Originally the Form DS-2019 was valid beginning July 2009, but because

there was a delay in the issuing of petitioner's visa, which caused a delay of his

start date in the residency training program, ECFMG had to issue him a new Form

DS-2019.

-9copies of the applicant's visa and insurance. ECFMG would not renew a Form

DS-2019 if the applicant's residency training program or university closed or if the

applicant's home country wanted him to return.

Petitioner obtained a J-1 visa on June 5, 2009. The J-1 visa allowed

petitioner to remain in the United States for the duration of the residency training

program and any postresidency fellowship but required him to return to Pakistan

for two years after his training unless he obtained a hardship waiver. M 4 sec.

62.27(g)(1). Petitioner entered the United States at the end of July 2009 and

began his residency training program at the university on August 10, 2009. The

university renewed petitioner's residency agreement yearly, allowing him to obtain

a new Form DS-2019 every year and to complete his three-year residency training

program on August 10, 2012. He then began a two-year fellowship in nephrology

at the university, which he completed in August 2014. He subsequently obtained a

hardship waiver of the J-1 visa two-year foreign residence requirement, which

allowed him to remain in the United States and work at the university hospital as a

licensed physician.

Petitioner's duties throughout his residency and fellowship included treating

patients on inpatient wards and in the outpatient clinic under faculty supervision,

conducting and presenting clinical research, and supervising and training third-

- 10 and fourth-year medical students. All of these duties, including the supervising

and training of medical students, were part of petitioner's training in the residency

training program. Petitioner was able to treat patients and train the medical

students simultaneously because, at that point in the medical students' education,

they spent most of their time in the hospital on the ward teams with the residents.

Three to five medical students accompanied petitioner on "rounds" during

which he treated patients, and he discussed the patients' physical examination

findings and other relevant information with the students. After rounds the

medical students accompanied petitioner while he treated incoming patients or

existing patients who needed additional care. After petitioner had finished treating

his patients, he helped the students prepare for their monthly examinations. At the

end of the month petitioner evaluated each student on certain criteria including

medical knowledge, interpersonal communication skills, and ability to gather

information and conduct physical examinations.

As discussed further §, petitioner came to the United States in 2009 and

remained in the United States in 2010 for the purpose of participating in a training

program for medical residents. Although supervising and training medical

students was a component of the residency training program, petitioner was not in

the United States for the purpose of teaching.

- 11 The university also expected petitioner to conduct research as part of his

residency training program. Petitioner spent one to two months per year on

research, during which time he took on lighter clinical responsibilities so that he

could conduct clinical research on selected patients. He conducted research

during 2009 through 2011, published abstracts and articles, and presented his

research at local and national medical conferences, such as the American Society

of Clinical Oncology annual meeting and the national meeting of the American

College of Physicians.6

II.

Petitioner's 2010 Federal Income Tax Return and Liability

Petitioner hired a tax return preparer in New York to prepare a Form

1040NR, U.S. Nonresident Alien Income Tax Return, on his behalf for taxable

year 2010.7 The return states that petitioner's occupation in the United States is

"research physician". The Form 1040NR does not report petitioner's wages from

the residency totaling $46,170 as taxable income but rather claims the wages as

6Petitioner estimated at trial that during 2010 his "education-related"

activities, including research and teaching students, constituted 70% of a typical

day. However, this percentage, even if accurate, is unconvincing as most of the

time he spent supervising and training medical students was time spent treating

patients as part of his residency training program.

7Although petitioner married in 2010, the return reflects a filing status of

"other single nonresident alien". Respondent does not challenge petitioner's

claimed filing status.

- 12 "income exempt by a treaty". A Schedule OI, Other Information, attached to the

return shows that petitioner claimed an exemption from income tax on his wages

under treaty art. XII. Petitioner did not report or pay tax on his 2010 wages to

Pakistan.

On November 19, 2012, petitioner filed a Form 9210, Alien Status

Questionnaire, with respect to taxable years 2010-12. In response to the question

regarding his reason for coming to the United States, petitioner checked the boxes

for "Education" and "Teaching". An unsigned Form 9250 was attached to the

Form 9210. On the Form 9250 petitioner indicated that his primary purpose in

visiting the United States was "teaching/research/training in internal medicine".

On the Form 9250 petitioner also stated that he came to the United States at the

invitation of an educational institution and spent 50% of his time teaching and

50% of his time researching. Petitioner also stated that his occupation before

coming to the United States was "medical student" and his occupation when he

returned to Pakistan would be "consultant physician in nephrology".

Respondent mailed petitioner a notice of deficiency, dated November 5,

2013, disallowing petitioner's claimed exemption from U.S. income tax under

treaty art. XII but allowing a $5,000 student exemption under treaty art.

- 13 XIII(l)(a)." Petitioner filed a timely petition in this Court contesting respondent's

determination.°

OPINION

I.

Burden of Proof

As a general rule, a notice of deficiency is entitled to a presumption of

correctness, and the taxpayer bears the burden of proving the Commissioner's

deficiency determination incorrect. Rule 142(a); Welch v. Helvering, 290 U.S.

111, 115 (1933); Bronstein v. Commissioner, 138 T.C. 382, 384 (2012).

8The Convention for the Avoidance of Double Taxation and the Prevention

of Fiscal Evasion With Respect to Taxes on Income, U.S.-Pak., art. XIII(l), July 1,

1957, 10 U.S.T. 984 (entered into force May 21, 1959), provides:

A resident of one of the contracting States, who is temporarily

present in the other contracting State solely

(a) as a student at a recognized university, college or

school in such other State, or

(b) as the recipient of a grant, allowance or award for the

primary purpose of study or research from a religious,

charitable, scientific or educational organization of the former

State

shall be exempted from tax by such other State (i) on all remittances

from abroad for the purposes of his maintenance, education or

training, and (ii) with respect to an amount not in excess of 5,000

United States dollars for any taxable year, representing compensation

for personal services.

9Petitioner initially elected to have this case conducted under small tax case

procedures. See sec. 7463(a). Before trial petitioner's counsel orally moved that

the "S" designation be removed, and we granted the oral motion.

- 14 However, under section 7491(a), if the taxpayer produces credible evidence¹° with

respect to any factual issue relevant to ascertaining the taxpayer's liability for tax

and meets other requirements, the burden of proof rests on the Commissioner as to

that factual issue. See Higbee v. Commissioner, 116 T.C. 438, 440-441 (2001).

With the exception of part III.B, infra, our findings of fact are based on a

preponderance of the evidence, and thus the allocation of the burden of proof is

immaterial. See Estate of Bongard v. Commissioner, 124 T.C. 95, 111 (2005).

With respect to part III.B, infra, petitioner does not argue, and the record does not

permit us to conclude, that the burden of proof should shift under section 7491(a),

and the burden of proof remains with petitioner.

II.

Governing Statutory Framework

Under the general rule of section 871(b), a nonresident alien individual such

as petitioner" who is engaged in a trade or business in the United States is subject

¹°"Credible evidence is the quality of evidence which, after critical analysis,

the court would find sufficient upon which to base a decision on the issue if no

contrary evidence were submitted (without regard to the judicial presumption of

IRS correctness)." Higbee v. Commissioner, 116 T.C. 438, 442 (2001) (quoting

H.R. Conf. Rept. No. 105-599, at 240-241 (1998), 1998-3 C.B. 747, 994-995).

"A nonresident alien is a person who is neither a citizen nor a resident of

the United States as defined in sec. 7701(b)(1)(A). Sec. 7701(b)(1)(B).

Respondent conceded that petitioner was not a citizen or a resident of the United

States in 2010.

- 15 to U.S. income tax on the individual's taxable income effectively connected with

the conduct of that trade or business. Ordinarily, an individual who performs

personal services within the United States at any time during the taxable year

conducts a "trade or business within the United States". Sec. 864(b).

Consequently, a nonresident alien who receives compensation for the performance

of personal services in the United States has income effectively connected with the

conduct of a trade or business in the United States and therefore has gross income

under the Code. See sec. 1.864-4(c)(6)(ii), Income Tax Regs.; see also sec.

61(a)(1). However, under section 894(a), the Code is applied to any taxpayer with

due regard to any treaty obligations of the United States that pertain to that

taxpayer. An applicable treaty obligation can therefore alter an individual's

income tax liability under the Code.

III.

The United States-Pakistan Income Tax Convention

The United States-Pakistan Income Tax Convention was signed on July 1,

1957, and was ratified by the President of the United States on November 6, 1958.

It entered into force on May 21, 1959, and is effective for taxable years beginning

on or after January 1, 1959. This case raises interpretation issues regarding treaty

art. XII, which deals with the tax ramifications of remuneration paid to professors

and teachers, and treaty art. XIII(3), which deals with the tax ramifications of

- 16 compensation paid for certain services related to training, study, or orientation

under arrangements with a State or any agency or instrumentality thereof.

When interpreting a treaty, we begin with the text of the treaty and the

context in which the written words are used. E. Airlines, Inc. v. Floyd, 499 U.S.

530, 534 (1991); Sumitomo Shoji Am., Inc. v. Avagliano, 457 U.S. 176, 179-180

(1982). The plain meaning of the language of a treaty controls unless its effect is

contrary to the intent or expectations of the signatories. Sanchez-Llamas v.

Oregon, 548 U.S. 331, 346 (2006) (citing 1 Restatement (Third) of Foreign

Relations Law of the United States sec. 325(1) (1986)); Sumitomo Shoji Am., Inc.,

457 U.S. at 180; Amaral v. Commissioner, 90 T.C. 802, 812 (1988). Because

treaties are contracts between sovereigns, we construe them more liberally than

private agreements to give effect to the signatories' intent. See United States v.

Stuart, 489 U.S. 353, 365-366 (1989); Air France v. Saks, 470 U.S. 392, 396

(1985); Factor v. Laubenheimer, 290 U.S. 276, 293 (1933); Estate of Silver v.

Commissioner, 120 T.C. 430, 434 (2003) (citing Nw. Life Assurance Co. of Can.

v. Commissioner, 107 T.C. 363, 378-379 (1996)). Where appropriate, we may

ascertain the meaning of a treaty with an eye toward the treaty's legislative history

and the parties' negotiations, diplomatic correspondence, and practical

construction they have adopted. See Air France, 470 U.S. at 396; Factor, 290 U.S.

- 17 at 294-295; Estate of Silver v. Commissioner, 120 T.C. at 434; Rust v.

Commissioner, 85 T.C. 284, 288-289 (1985). We also give weight to how the

departments of the respective governments charged with negotiating and enforcing

a treaty interpret that treaty. See Kolovrat v. Oregon, 366 U.S. 187, 194 (1961);

Rust v. Commissioner, 85 T.C. at 288.

A.

Article XII of the United States-Pakistan Income Tax Convention

Treaty art. XII provides: "A professor or teacher, resident in one of the

contracting States, who temporarily visits the other contracting State for the

purpose of teaching for a period not exceeding two years at a university, college,

school or other educational institution in the other contracting State, shall be

exempted from tax by such other contracting State in respect of remuneration for

such teaching." Petitioner contends that the compensation he received in 2010 for

his residency training program is exempt from U.S. income tax under treaty art.

XII because a purportedly large component of the residency training program was

teaching third- and fourth-year medical students. Respondent counters that

petitioner (1) was not in the United States for "the purpose of teaching" and (2)

was not temporarily visiting the United States for "a period not exceeding two

years".

- 18 The phrase "the purpose of teaching" is not defined in the treaty. Our

analysis focuses on the meaning of the word "purpose" and on whether petitioner

had the requisite purpose. Neither party has invited our attention to, and we have

not found any, legislative history or documentary evidence of the negotiators' or

signatories' intended meaning of the word "purpose".¹² See, e.g., S. Exec. Rept.

No. 85-1 (1958), 1960-2 C.B. 906 (Committee on Foreign Relations report on the

treaty); 104 Cong. Rec. 13238-13241 (1958) (Senate floor debate and action on

the treaty); Treasury Department Technical Explanation of the 1957 U.S.-Pakistan

income tax treaty (Technical Explanation), signed July 1, 1957, RIA Int'l Tax

Treaty 7033. In the instance of an undefined treaty term, treaty art. II(2) provides:

"[A]ny term not otherwise defined shall, unless the context otherwise requires,

¹²To support his position, petitioner relies upon several revenue rulings

promulgated by the Commissioner which we address infra. But the Commissioner

generally does not participate in the negotiation of tax treaties, and we do not

interpret the revenue rulings as evidence of the negotiators' or signatories' intent.

S_e_e Crow v. Commissioner, 85 T.C. 376, 389 (1985) ("A revenue ruling

represents the view of the Commissioner, not the Treasury Department, and thus is

generally only 'the contention of one of the parties to the litigation.'" (citation

omitted) (quoting Estate of Smead v. Commissioner, 78 T.C. 43, 47 n.5 (1982)));

see also Xilinx, Inc. v. Commissioner, 598 F.3d 1191, 1196 (9th Cir. 2010) ("A

tax treaty is negotiated by the United States with the active participation of the

Treasury."), af[g 125 T.C. 37 (2005). But ef. Rauenhorst v. Commissioner, 119

T.C. 157, 171 (2002) (describing cases where we have treated revenue rulings as

concessions by the Commissioner where the rulings were relevant to the

disposition of the case).

- 19 have the meaning which it has under the laws of that contracting State relating to

the taxes which are the subject of the present Convention." "[P]urpose" is not

defined in the Code in any way meaningful to this situation. We therefore "adopt

the ordinary, contemporary understanding of * * * [this] word[] for purposes of

our analysis." See Eshel v. Commissioner, 142 T.C. 197, 209 (2014).

Black's Law Dictionary defines "purpose" as "[a]n objective, goal, or end".

Black's Law Dictionary 1356 (9th ed. 2009). Merriam-Webster's Collegiate

Dictionary defines "purpose" as "something set up as an object or end to be

attained", Merriam-Webster's Collegiate Dictionary 949 (10th ed. 1997), and

Merriam-Webster's Online Dictionary defines it as "the reason why something is

done or used: the aim or intention of something"; "the feeling of being determined

to do or achieve something"; and "the aim or goal of a person: what a person is

trying to do, become, etc.", Merriam-Webster's Online Dictionary,

http://www.merriam-webster.com/dictionary/purpose(last visited Nov. 16, 2015).

We use these definitions, which focus on the object or goal to be attained, to

guide our analysis.¹³ In so doing, we recognize that the better indicator of an

¹³Petitioner cites Rev. Rul. 55-211, 1955-1 C.B. 676, to support his position.

We address petitioner's contentions

but for now note that Rev. Rul. 55-211,

supra, the subject of which is the income tax treaty between the United States and

the United Kingdom of Great Britain and Northern Ireland, interprets the phrase

(continued...)

- 20 individual's purpose is his conduct and not the individual's self-serving

representations regarding his purpose. We examine the entire record and consider

all of the relevant facts and circumstances to discern petitioner's purpose in

coming to the United States.

Before coming to the United States, petitioner obtained a medical degree in

Pakistan. He believed the medical training in the United States was "far superior"

to the training he received in Pakistan and, for that reason, decided to pursue a

medical residency here. In furtherance of his stated goal of obtaining U.S. medical

training, petitioner obtained a Form DS-2019 from ECFMG, which allowed him to

¹³(...continued)

"the purpose" in a nearly identical context to mean "the primary purpose". Id.,

1955-1 C.B. at 677. We neither endorse nor reject that interpretation because we

find that petitioner's only purpose in coming to and remaining in the United States

in 2010 was to receive medical training.

Further, in reaching our holding today, we need not address whether the

definite article "the" restricts or otherwise modifies the "purpose" that is the

subject of treaty art. XII. Cf NLRB v. Noel Canning, 573 U.S. __, __, 134 S.

Ct. 2550, 2561 (2014) (discussing the meaning of "the" in the Constitution);

Baldwin Graphic Sys., Inc. v. Siebert, Inc., 512 F.3d 1338, 1342-1343 (Fed. Cir.

2008) (discussing the meaning and use of definite articles in patent law); Colorado

v. Sunoco, Inc., 337 F.3d 1233, 1241-1242 (10th Cir. 2003) (discussing the

meaning and use of definite articles under the Comprehensive Environmental

Response, Compensation, and Liability Act of 1980, Pub. L. No. 96-510, 94 Stat.

2767 (codified as amended at 42 U.S.C. secs. 9601-9675 (2000))); Ltd., Inc. v.

Commissioner, 286 F.3d 324, 333-334 (6th Cir. 2002) (addressing the word "the"

as used in sec. 956(b)(2)(A)), rev'g 113 T.C. 169 (1999).

- 21 apply for and receive a J-l visa. The Form DS-2019, which we consider to be

objective, credible evidence of petitioner's and ECFMG's understanding regarding

the nature of petitioner's trip to the United States, describes petitioner as a

"university post grad medical trainee", an "alien physician", and a "research

scholar".¹4 Although both "teacher" and "professor" are possible categories of

¹4Regulations implementing the Mutual Educational and Cultural Exchange

Act of 1961, Pub. L. No. 87-256, 75 Stat. 527 (codified as amended at 22 U.S.C.

secs. 2451-2464 (1988)) govern the issuance of Form DS-2019 and define the

categories of participant eligibility in an exchange visitor program underlying the

issuance of a J-l visa. See 22 C.F.R. secs. 62.1, 62.2, 62.4 (2010). Under the

regulations, "alien physician" is a category of participant eligibility in which

foreign medical school graduates may enter the United States to participate in

either a clinical exchange program or a nonclinical exchange program. R sec.

62.27(b) and (c); see 4 para. (d). A clinical exchange program is a program for

alien physicians pursuing graduate medical education or training, and, inter alia,

requires that an alien physician provide a statement from the Government of his

home country that (1) there is a need in that country for qualified medical

practitioners in the alien physician's chosen speciality and (2) the alien physician

has in writing agreed to return to the home country upon completion of the

training and intends to practice medicine in the chosen speciality. R para. (b)(6).

A nonclinical exchange program is a program in which an alien physician enters

the United States for the predominant purposes of observation, consultation,

teaching, or research, wherein patient care, if any, is incidental and under direct

supervision. R sec. 62.27(c). Although petitioner's Form DS-2019 does not

specifically state whether he entered the United States for the purpose of a clinical

or a nonclinical exchange program, the record indicates that petitioner intended to

pursue a clinical exchange program. For example, only alien physicians entering a

clinical exchange program need to pass steps 1 and 2 of the USMLE (or a similar

examination). Petitioner testified that he needed to pass the USMLE to begin his

residency training program. See 4 para. (b)(5).

(continued...)

- 22 participant eligibility on Form DS-2019, see 22 C.F.R. sec. 62.4(d) and (e) (2010);

supra note 14, petitioner was not described as a teacher or a professor on the

original Form DS-2019 or any subsequent renewal of the form.

The 2009 agreement outlines the university's and petitioner's

responsibilities during the residency training program and frames petitioner's

expectations of the residency training program. The university agreed to provide a

"graduate medical education program" with "faculty oversight and supervision of

all educational and clinical activities". Petitioner agreed to "fulfill the educational

requirements of the training program" and use his "best efforts to provide safe,

effective and compassionate patient care". In the context of the 2009 agreement,

the "educational * * * activities" and "educational requirements" are most

"(...continued)

"Graduate medical education or training" is defined as "participation in a

program in which the alien physician will receive graduate medical education or

training, which generally consists of a residency or fellowship program involving

health care services to patients, but does not include programs involving

observation, consultation, teaching or research in which there is no or only

incidental patient care." Id. sec. 62.2 (emphasis added).

The applicable definition of research scholar is: "An individual primarily

conducting research, observing, or consulting in connection with a research

project at research institutions, corporate research facilities, museums, libraries,

post-secondary accredited educational institutions, or similar types of institutions.

The research scholar may also teach or lecture, unless disallowed by the sponsor."

Il sec. 62.4(f).

- 23 reasonably interpreted to refer to the education petitioner would receive by

participating in the residency training program. The offer letter, which does not

speak to petitioner's duties, and the 2009 agreement encompassed the entire

understanding between the university and petitioner.¹5 Neither document refers to

any obligation to teach medical students nor suggests that petitioner's

remuneration was for teaching. Rather, the 2009 agreement focuses on the

education petitioner would be receiving and the patient care he would be

providing as a resident. Moreover, the 2009 agreement was renewed for each year

of petitioner's residency without a material change in the description of the

residency training program or petitioner's responsibilities as a resident.

During the residency training program petitioner's training consisted of

treating patients under faculty supervision, conducting and presenting research,

and supervising and training medical students. Petitioner was responsible for

taking three to five medical students with him on rounds, preparing them for their

monthly examinations, and evaluating them at the end of each month. Although

petitioner estimated that he spent 70% of his time in "education-related" activities,

¹sIn the record is a letter dated November 20, 2012, from the university's

director of the internal medicine residency training program describing petitioner's

position and duties during his residency. Although helpful in ascertaining what

petitioner did during his residency, the letter is not part of the offer or contract

between petitioner and the university.

- 24 we do not find his estimate convincing because, as he acknowledged, much of his

time spent with medical students occurred while he was also treating patients. Nor

do we assign much weight to the Form 9210 and unsigned Form 9250 that

petitioner completed in 2012, in which petitioner stated that his primary purpose in

visiting the United States was "teaching/research/training in internal medicine"

and estimated that he spent 50% of his time teaching and 50% of his time

researching during taxable years 2010-12. Petitioner completed these forms two

years after the year in issue, and we regard them only as petitioner's post hoc

position regarding his 2010 claimed treaty exemption. Moreover, on the Form

9250 petitioner indicated that his occupation before coming to the United States

was medical student and his occupation upon returning to Pakistan would be

consultant physician in nephrology. This description of petitioner's occupation

before and after the residency training program clearly implies that he participated

in the residency training program to obtain a change in professional status.

Petitioner contends that his time spent "teaching" medical students is

sufficient to prove that he was in the United States for the "purpose of teaching".

However, petitioner's involvement in the supervising and training of medical

students was a component of his stated goal to receive U.S. medical training and

become a fully licensed doctor and was not his objective or aim during the year in

- 25 issue. The overwhelming weight of the evidence shows that petitioner did not

enter the residency training program to become a teacher. The university did not

hire petitioner to teach, and he did not hold a faculty appointment. The Form DS2019 and the 2009 agreement show that neither ECFMG nor the university

contemplated that petitioner was coming to the United States with the "objective"

or "goal" of teaching. See Black's Law Dictionary 1356. Instead, teaching was an

incidental part of petitioner's overall training to become a doctor, which primarily

involved treating patients and also included conducting research.¹6 On the basis of

all the facts and circumstances, we find that petitioner's purpose in coming to and

remaining in the United States in 2010 was to receive postgraduate medical

training and that he was not in the United States for the purpose of teaching.

Petitioner cites several revenue rulings to support his position that he was in

the United States for the purpose of teaching. However, they do not help him.

Rev. Rul. 55-211, 1955-1 C.B. 676, concerns the application of a treaty

provision similar to treaty art. XII to nationals of the United Kingdom who held

¹6Some income tax treaties to which the United States is a party exempt

from income tax any remuneration received for conducting research. See, e.g.,

Convention for the Avoidance of Double Taxation and the Prevention of Fiscal

Evasion With Respect to Taxes on Income, U.S.-Belg., art. 19(2), Nov. 27, 2006,

Tax Treaties (CCH) para. 31,011 (entered into force Dec. 28, 2007). The United

States-Pakistan Income Tax Convention is not one of them.

- 26 faculty appointments at various universities in the United States. The revenue

ruling concludes that the treaty benefit obtains if an individual's "primary purpose

* * * is to teach, lecture or instruct" and "a substantial portion of his time is

devoted to such duties". R, 1955-1 C.B. at 677. "Where, however, the primary

purpose of his presence in the United States is the pursuit of research and like

duties and any teaching is incidental to such research it cannot be considered that

he is present in the United States 'for the purpose of teaching'". R The revenue

ruling also states: "Activities in which a teacher engages for the purpose of

conferring on students the benefit of his knowledge and methods as distinguished

from the pursuit of his own projects would be considered a part of his teaching."

Id.

Rev. Rul. 74-174, 1974-1 C.B. 371, interprets Rev. Rul. 55-211, supra, and

applies its reasoning to different facts." It involves a citizen and resident of

Canada who was an assistant professor in Canada, entered the United States to

study for a doctoral degree, and spent 60% of his time in the United States

performing duties as a teaching assistant. Rev. Rul. 74-174, supra. Applying an

objective facts and circumstances analysis, the revenue ruling concludes that the

"Petitioner does not explicitly rely on Rev. Rul. 74-174, 1974-1 C.B. 371,

but we address it for the sake of completeness.

- 27 individual's compensation for his duties as a teaching assistant was exempt from

income tax because he "was engaged in the business of teaching before coming to

the United States" and because he spent substantial time performing teaching

duties even though he was also a doctoral student. Id., 1974-1 C.B. at 372.

Petitioner contends that "because the vast majority of his time was spent

engaged in educational duties", he falls within the purview of Rev. Rul. 55-211,

supra, and qualifies for an exemption under treaty art. XII. However, the evidence

in the record supports findings that petitioner was a medical student, not a teacher,

before coming to the United States for his residency training program, see supra

note 3, and that he did not hold a faculty or teaching position at the university

during 2010. Petitioner's supervising and training of medical students, which he

performed mainly while treating patients, was incidental to his graduate medical

education, and he has not "distinguished [supervising and training of medical

students] from the pursuit of his own projects". See Rev. Rul. 55-211, 1955-1

C.B. at 677. Petitioner's situation is distinguishable from those in Rev. Rul. 55211, supra, and Rev. Rul. 74-174, supra.

Petitioner also cites Rev. Rul. 69-46, 1969-1 C.B. 365, and Rev. Rul. 70382, 1970-2 C.B. 331, for the proposition that an individual does not need to have

taught in his home country before entering the United States for the purpose of

- 28 teaching. The revenue rulings state that, as applied to treaty provisions similar to

the one at issue here, an individual's remuneration for teaching is exempt from

income tax even if the individual had not taught in his home country before

entering the United States. Rev. Rul. 70-382, 1970-2 C.B. at 331; Rev. Rul. 6946, 1969-1 C.B. at 365. However, in both revenue rulings the individuals

qualified as teachers in their home countries and entered the United States for the

express purpose of teaching in schools. Rev. Rul. 70-382, supra; Rev. Rul. 69-46,

supra. The record overwhelmingly establishes that petitioner did not enter the

United States for the express purpose of teaching. Rev. Rul. 69-46, supra, and

Rev. Rul. 70-382, supra, do not support petitioner's contention.

Finally, petitioner cites United States v. Mem'l Sloan-Kettering Cancer Ctr.,

563 F.3d 19 (2d Cir. 2009), for the proposition that modern medical residents are

principally teachers. The issue in Sloan-Kettering was whether medical residents

were liable for payroll taxes because they were employees or whether their income

was excepted from payroll taxes because they were students. R at 24-25. In

remanding the two consolidated cases, the U.S. Court of Appeals for the Second

Circuit held that "[w]hether a medical resident is a 'student' and whether he is

employed by a 'school, college, or university' are separate factual inquiries that

depend on the nature of the residency program in which the medical residents

- 29 participate and the status of the employer." Id. at 28 (quoting United States v.

Mount Sinai Med. Ctr. of Fla., Inc., 486 F.3d 1248, 1252 (11th Cir. 2007)).

Petitioner argues that, consistent with the Court of Appeals' reasoning, the record

proves that he was a teacher rather than a student because he was compensated and

received benefits for his services.

Sloan-Kettering is not binding precedent in this case¹8 and is inapplicable to

services performed on or after April 1, 2005, the effective date of regulations that

created a bright-line rule for distinguishing between students and full-time

employees for purposes of the student exception to payroll taxes under section

3121(b)(10). See Sloan-Kettering, 563 F.3d at 25 n.2; sec. 31.3121(b)(10)2(d)(3)(iii), (e) Example (4), (f), Employment Tax Regs.; see also Mayo Found.

for Med. Educ. & Research v. United States, 562 U.S. 44 (2011) (holding the

regulations that apply to services performed on or after April 1, 2005, valid).

Moreover, petitioner takes the analysis of Sloan-Kettering several inferential steps

¹ªUnder the rule of Golsen v. Commissioner, 54 T.C. 742, 757 (1970), M,

445 F.2d 985 (10th Cir. 1971), this Court will "follow a Court of Appeals decision

which is squarely in point where appeal from our decision lies to that Court of

Appeals and to that court alone." This case appears to be appealable to the U.S.

Court of Appeals for the Tenth Circuit, absent a stipulation to the contrary. M

sec. 7482(b)(1)(A), (2). Therefore caselaw from the U.S. Court of Appeals for the

Second Circuit would not be binding in this case even if United States v. Mem'l

Sloan-Kettering Cancer Ctr., 563 F.3d 19 (2d Cir. 2009), were "squarely in point",

which it is not.

- 30 too far. Sloan-Kettering involved payroll taxes rather than a treaty provision and

focused on whether medical residents are students or employees without

specifying whether a medical resident who was an employee was compensated for

treating patients, researching, teaching, or performing other personal services.

The guidance that petitioner cites is inapposite or distinguishable. The

record clearly proves that petitioner's purpose in the United States during 2010

was to receive medical training. The supervising and teaching of medical students

that petitioner did was an incidental part of his medical training and was not his

objective or goal in coming to or remaining in the United States. We conclude

that petitioner was not in the United States in 2010 for the purpose of teaching.¹°

B.

Article XIII(3) of the United States-Pakistan Income Tax Convention

Petitioner's alternative contention is that, if his income is not exempt under

treaty art. XII, then $10,000 of his income is exempt under treaty art. XIII(3).

Article XIII(3) of the United States-Pakistan Income Tax Convention provides:

A resident of one of the contracting States temporarily present in the

other contracting State under arrangements with such other State or

any agency or instrumentality thereof solely for the purpose of

training, study or orientation shall be exempted from tax by such

other State with respect to compensation not exceeding 10,000 United

¹9Because we find that petitioner was not in the United States for the

purpose of teaching, we do not address respondent's remaining contentions

regarding the applicability of treaty art. XII.

- 31 States dollars for the rendition of services directly related to such

training, study or orientation (including emoluments and

remuneration, if any, from the employer abroad of such resident).

As applicable here, "other State" means the United States. See id. art. II(1)(c).

The Department of the Treasury technical explanation of the treaty clarifies that

this exemption applies to "Pakistan personnel invited to the United States for

training or study by our Government," including "military and armed forces

trainees, central bank employees studying budgetary and financial policies, and

trainees under technical assistance programs." Technical Explanation, supra.

In the petition, petitioner vaguely contends that he qualifies for this

exemption because the university is a Government contractor and therefore is an

agency or instrumentality of the United States. We have recognized that

"'[a]gency' and 'instrumentality' are terms of considerable breadth, and they are

susceptible of different meanings in different contexts." Guardian Indus. Corp. v.

Commissioner, 143 T.C. 1, 12-14 (2014) (listing cases where "agency" and

"instrumentality" have different definitions in various circumstances). However,

even if petitioner had provided authority to support his contention that a

Government contractor qualifies as an agency or instrumentality in this context,

which he has not, he has failed to introduce any credible evidence showing that the

university was a Government contractor for the U.S. Government in 2010.

- 32 Moreover, there is no credible evidence to prove that the signatories of the treaty

intended article XIII(3) to apply to anything other than a Government-sponsored

or -supported program. See Technical Explanation, supra; £ Rev. Rul. 72-301,

1972-1 C.B. 439-440 (analyzing similar provisions in other income tax treaties to

conclude that treaty art. XIII(3) applies only to "individuals who, under

arrangements with the United States or an agency or instrumentality thereof, are

invited to the United States for training or study under a specific program,

sponsored or supported by the United States Government"). Because petitioner

bears the burden of proof with respect to this issue, see supra pp. 13-14, and has

not proven that he was in the United States under arrangements with the U.S.

Government or an agency or instrumentality thereof, he is not entitled to an

exemption under treaty art. XIII(3).

IV.

Conclusion

Petitioner does not qualify for an exemption under article XII or article

XIII(3) the United States-Pakistan Income Tax Convention. We therefore sustain

respondent's determination as amended in the first supplemental stipulation of

facts. M supra note 1. We have considered the parties' remaining arguments,

and to the extent not discussed above, conclude those arguments are irrelevant,

moot, or without merit.

- 33 To reflect the foregoing,

Decision will be entered under

Rule 155.