business Transportation Transportation begins and ends in US 50 of income from

Business transportation transportation begins and

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business) Transportation Transportation begins and ends in U.S. 50% of income from transportation beginning or ending abroad Transportation begins and ends outside U.S. 50% of income from transportation beginning or ending abroad Space and Ocean Activity Derived 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) Income Sourcing Categories ¶25,345 PERSONAL SERVICES INCOME The source of compensation from personal services generally depends on where the personal services were performed. Services performed in the United States result in U.S.-source compensation. Services performed abroad constitute foreign-source income (Code Secs. 861(a) (3) and 862(a)(3)). Personal services income includes salaries, wages, fees, bonuses, commissions, and fringe benefits. There are two major exceptions to the general rule. Under the first exception, compensation paid to a nonresident alien with only a temporary presence in the United States as a regular member of a foreign vessel engaged in transportation between the United States and a foreign country is treated as foreign-source income. The second exception provides a de minimis rule for nonresident aliens. Domestic-source income is recharacterized as foreign-source income if the conditions of Code Sec. 861(a)(3) are satisfied. This allows nonresident aliens to avoid U.S. taxation when visiting the United States on short business trips. Compensation for labor or personal services performed in the United States is not income from U.S. sources if all of the following requirements are satisfied: 1. The labor or services are performed by a nonresident alien individual temporarily present in the United States for a period(s) not exceeding a total of 90 days during the tax year. 2. The compensation does not exceed $3,000 in the aggregate. 3. The compensation is for labor or services performed as an employee of (a) a nonresident alien or foreign business not engaged in trade or business in the United States or (b) a U.S. citizen or resident or domestic business if the services are performed for an office or place of business maintained in a foreign country or U.S. possession by that individual or business. As a general rule, when labor or personal services are performed partly within and partly without the United States, the part of the compensation that is attributable to labor or personal services performed within the United States is determined on the basis that most correctly reflects the proper source of the income under the facts and circumstances of the particular case. In many cases, the facts and circumstances will be such that an apportionment on a time basis will be acceptable. The allocation formula is: total compensation x (number of days of service in the United States/total number of days of performance of labor or services for which the payment is made). Reg. §1.861-4(b).
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