Royalties from patents, copyrights, etc.

Where Property is Used

For the following types of royalties, the income source is determined by where the property is used:

• Patents
• Copyrights
• Secret processes and formulas
• Goodwill
• Trademarks
• Franchises
• Other similar property

A Puerto Rican resident who earns royalties from a patent used in a factory in the U.S. receives U.S. source income.