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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Dividends
In most cases, dividend income received from domestic corporations is U.S.
source income. Dividend income from foreign corporations is usually foreign
source income. Exceptions to both of these rules are discussed below.
A substitute dividend payment made to the transferor of a security in a
securities lending transaction or a sale-repurchase transaction is sourced in
the same manner as a distribution on the transferred security.
Dividend equivalent payments. Dividend equivalent payments
include substitute dividends, payments made pursuant to a specified notional
principal contract, and all similar payments that, directly or indirectly, are
contingent on or determined by reference to, the payment of a dividend from U.S.
sources.
First exception. Dividends received from a domestic corporation
are not U.S. source income if the corporation elects to take the American Samoa
economic development credit.
Second exception. Part of the dividends received from a foreign
corporation is U.S. source income if 25% or more of its total gross income for
the 3-year period ending with the close of its tax year preceding the
declaration of dividends was effectively connected with a trade or business in
the United States. If the corporation was formed less than 3 years before the
declaration, use its total gross income from the time it was formed. Determine
the part that is U.S. source income by multiplying the dividend by the following
fraction.
Foreign corporation�s gross income connected
with a U.S. trade or business for the 3-year period
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Foreign corporation�s gross income
from all sources for that period
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