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SEC. 861. INCOME FROM SOURCES WITHIN THE UNITED STATES.
Subsec. (a) Gross Income From Sources Within United States.--
The following items of gross income shall be treated as income from sources
within the United States:
861(a)(1) Interest.--Interest
from the United States or the District of Columbia, and interest on bonds, notes,
or other interest-bearing obligations of noncorporate residents or domestic
corporations, not including--
861(a)(1)(A)
interest from a resident alien individual or domestic corporation, if such individual
or corporation meets the 80-percent foreign business requirements of subsection
(c)(1), and
861(a)(1)(B)
interest--
861(a)(1)(B)(I)
on deposits with a foreign branch of a domestic corporation or a domestic partnership
if such branch is engaged in the commercial banking business, and
861(a)(1)(B)(ii)
on amounts satisfying the requirements of subparagraph (B) of section 871(I)(3)
which are paid by a foreign branch of a domestic corporation or a domestic
partnership.
861(a)(2) Dividends.--The
amount received as dividends--
861(a)(2)(A)
from a domestic corporation other than a corporation which has an election in
effect under section 936 , or
861(a)(2)(B)
from a foreign corporation unless less than 25 percent of the gross income from
all sources of such foreign corporation for the 3-year period ending with the
close of its taxable year preceding the declaration of such dividends (or for
such part of such period as the corporation has been in existence) was effectively
connected (or treated as effectively connected other than income described in
section 884(d)(2) ) with the conduct of a trade or business within the
United States; but only in an amount which bears the same ratio to such dividends
as the gross income of the corporation for such period which was effectively
connected (or treated as effectively connected other than income described in
section 884(d)(2) ) with the conduct of a trade or business within the
United States bears to its gross income from all sources; but dividends (other
than [SP.1]dividends [SP.1]for [SP.1]which [SP.1]a [SP.1]deduction [SP.1]is
[SP.1]allowable [SP.1]under [SP.1]section [SP.1]245(b)) [SP.1]from [SP.1]a [SP.1]foreign
corporation shall, for purposes of subpart A of part III (relating to foreign
tax credit), be treated as income from sources without the United States to
the extent (and only to the extent) exceeding the amount which is 100/70th of
the amount of the deduction allowable under section 245 in respect of
such dividends, or
861(a)(2)(C)
from a foreign corporation to the extent that such amount is required by
section 243(e) (relating to certain dividends from foreign corporations)
to be treated as dividends from a domestic corporation which is subject to taxation
under this chapter, and to such extent subparagraph (B) shall not apply to such
amount, or
861(a)(2)(D)
from a DISC or former DISC (as defined in section 992(a) ) except to
the extent attributable (as determined under regulations prescribed by the Secretary)
to qualified export receipts described in section 993(a)(1) (other than
interest and gains described in section 995(b)(1) ).
In the case of any dividend from a 20-percent owned corporation (as defined
in section 243(c)(2) ), subparagraph (B) shall be applied by substituting
"100/80th" for "100/70th".
861(a)(3)
Personal services.--Compensation for labor
or personal services performed in the United States; except that compensation
for labor or services performed in the United States shall not be deemed to
be income from sources within the United States if--
861(a)(3)(A)
the labor or services are performed by a nonresident alien individual temporarily
present in the United States for a period or periods not exceeding a total of
90 days during the taxable year,
861(a)(3)(B)
such compensation does not exceed $3,000 in the aggregate, and
861(a)(3)(C)
the compensation is for labor or services performed as an employee of or under
a contract with--
861(a)(3)(C)(i)
a nonresident alien, foreign partnership, or foreign corporation, not engaged
in trade or business within the United States, or
861(a)(3)(C)(ii)
an individual who is a citizen or resident of the United States, a domestic
partnership, or a domestic corporation, if such labor or services are performed
for an office or place of business maintained in a foreign country or in a possession
of the United States by such individual, partnership, or corporation.
861(a)(4) Rentals
and royalties.--Rentals or royalties from property located in the United States
or from any interest in such property, including rentals or royalties for the
use of or for the privilege of using in the United States patents, copyrights,
secret processes and formulas, good will, trade-marks, trade brands, franchises,
and other like property.
861(a)(5) Disposition
of united states real property interest.--Gains, profits, and income from the
disposition of a United States real property interest (as defined in section
897(c) ).
861(a)(6) Sale
or exchange of inventory property.--Gains, profits, and income derived from
the purchase of inventory property (within the meaning of0 section 865(i)(1)
) without the United States (other than within a possession of the United
States) and its sale or exchange within the United States.
861(a)(7) Amounts
received as underwriting income (as defined in section 832(b)(3)) derived
from the issuing (or reinsuring) of any insurance or annuity contract--
861(a)(7)(A)
in connection with property in, liability arising out of an activity in, or
in connection with the lives or health of residents of, the United States, or
861(a)(7)(B)
in connection with risks not described in subparagraph (A) as a result of any
arrangement whereby another corporation receives a substantially equal amount
of premiums or other consideration in respect to issuing (or reinsuring) any
insurance or annuity contract in connection with property in, liability arising
out of activity in, or in connection with the lives or health of residents of,
the United States.
861(a)(8) Social
security benefits.--Any social security benefit (as defined in section 86(d)).
SEC. 3402(e) Included And Excluded
Wages
If the remuneration paid by an employer to an employee for services
performed during one-half or more of any payroll period of not more than 31
consecutive days constitutes wages, all the remuneration paid by such employer
to such employee for such period shall be deemed to be wages; but if the remuneration
paid by an employer to an employee for services performed during more than one-half
of any such payroll period does not constitute wages, then none of the remuneration
paid by such employer to such employee for such period shall be deemed to be
wages.
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