The royalty income from Rolex was 50% U.S.-source income not effectively connected with a U.S. trade or business.

FORBES: IRS Sand Trap For Pro Golfers

The royalty income from Upper Deck was 92% U.S.-source income not effectively connected with a U.S. trade or business.

FORBES: IRS Sand Trap For Pro Golfers

While Goosen and the IRS both agreed that personal services income, tournament bonuses and ranking bonuses should be considered US sourced, they disagreed as to what portion of the royalty income from endorsement fees should be considered US sourced.

FORBES: Tax Court to Athletes: Image Isn't Everything But It's At Least 50%

And as a result, the court agreed with Goosen that income received from those contracts could be classified as half royalty income and half personal services income.

FORBES: Tax Court to Athletes: Image Isn't Everything But It's At Least 50%

States with big energy production, like Louisiana and Oklahoma, also have another reform option: replacing the income tax with revenues from oil and gas extraction taxes, drilling leases and royalty payments.

WSJ: Review & Outlook: The State Tax Reformers

Filing non-resident U.S. tax returns, Goosen allocated 50% of his endorsement fees and bonuses from Acushnet, TaylorMade and Izod to personal services, classifying the other 50% as royalty income.

FORBES: IRS Sand Trap For Pro Golfers