than a foreign corporation conducting business in U.S.)Disposition of RealtyProperty is located in U.S.Property is located abroadDisposition of Personalty:Depreciable propertyGain equal to U.S. depreciation adjustments plus remaining gain if property disposed of in U.S.Gain equal to non-U.S. depreciation adjustments plus remaining gain if property disposed of outside U.S.Inventory purchased for resaleDisposed of within U.S.Disposed of outside U.S.
Income CategoryU.S.-SourceForeign-SourceGeneral Sourcing RulesInventory produced by taxpayerIncome from production activity within U.S.Sales activity income from sale within U.S.Income from production activity outside U.S.Sales activity income from sale outside U.S.Intangibles (other than Goodwill)If intangible is depreciable, portion of gain equal to portion of depreciation adjustments attributable to U.S. depreciation If intangible is depreciable, portion of gain equal to portion of depreciation adjustments not attributable to U.S. depreciation Chapter 25, Exhibit 58cadjustmentsTo extent that payments are contingent, property is located or used in U.S.; to extent that payments are not contingent, seller is U.S. residentadjustmentsTo extent that payments are contingent, property is located or used outside U.S.; to extent that payments are not contingent, seller is foreign residentGoodwillGoodwill generated in U.S.Goodwill generated outside U.S.All OtherSeller is U.S. residentSeller is foreign resident
General Sourcing RulesIncome CategoryU.S.-SourceForeign-SourceGuarantee of DebtNoncorporate resident or domestic corporation or foreign person if payment is connected with foreign person’s income effectively connected with conduct of U.S. trade or businessForeign person, unless payment is connected with foreign person’s income effectively connected with conduct of U.S. trade or businessInternational Communications50% of income of U.S. personIncome attributable to U.S. business of foreign person50% of income of U.S. personAll income of foreign person (except for income attributable to U.S. business)Chapter 25, Exhibit 58dbusiness)TransportationTransportation begins and ends in U.S.50% of income from transportation beginning or ending abroadTransportation begins and ends outside U.S.50% of income from transportation beginning or ending abroadSpace and Ocean ActivityDerived by U.S. person (except to extent income is attributable to functions performed, resources employed, or risks assumed in a foreign country)Derived by foreign person (other than CFC or foreign person engaged in U.S. business)
Relief from Double TaxationRelief from Double TaxationChapter 25
square6The rate of tax or the sourcing of income may be changed by virtue of a tax treaty between the United States and the country where the nonresident alien or foreign company resides square6Income tax treaties affect how U.S. persons are taxed by a foreign country and how foreign persons are taxed by the Income Tax Treaties United States.
- Fall '14
- Accounting, Taxation in the United States