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Important
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For information call now:
(347) 989-4566
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Additional information
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Internal Revenue Service
Austin Service Center
ITIN Operation
P.O. Box 149342
Austin, TX 78714-9342
IN
1-800-829-1040
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Foreign Income
You must treat three kinds of foreign source income as effectively connected
with a trade or business in the United States if:
� You have an office or other fixed place of business in the United States to
which the income can be attributed,
� That office or place of business is a material factor in producing the income,
and
� The income is produced in the ordinary course of the trade or business carried
on through that office or other fixed place of business.
An office or other fixed place of business is a material factor if it
significantly contributes to, and is an essential economic element in, the
earning of the income.
The three kinds of foreign source income are listed below.
1. Rents and royalties for the use of, or for the privilege of
using, intangible personal property located outside the United States or from
any interest in such property. Included are rents or royalties for the use, or
for the privilege of using, outside the United States, patents, copyrights,
secret processes and formulas, goodwill, trademarks, trade brands, franchises,
and similar properties if the rents or royalties are from the active conduct of
a trade or business in the United States.
2. Dividends or interest from the active conduct of a banking,
financing, or similar business in the United States. A substitute dividend or
interest payment received under a securities lending transaction or a
sale-repurchase transaction is treated the same as the amounts received on the
transferred security.
3. Income, gain, or loss from the sale outside the United
States, through the U.S. office or other fixed place of business, of:
a. Stock in trade,
b. Property that would be included in inventory if on hand at
the end of the tax year, or
c. Property held primarily for sale to customers in the
ordinary course of business.
Item (3) will not apply if you sold the property for use, consumption, or
disposition outside the United States and an office or other fixed place of
business in a foreign country was a material factor in the sale.
Any foreign source income that is equivalent to any item of income described
above is treated as effectively connected with a U.S. trade or business. For
example, foreign source interest and dividend equivalents are treated as U.S.
effectively connected income if the income is derived by a foreign person in the
active conduct of a banking, financing, or similar business within the United
States.
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