Summary (continued)
The rules for identifying the source of each type of income are as follows:
- Where the services are performed determines the source of income from salaries and other compensation. (There is a special rule for military pay received by bona fide residents of Puerto Rico who are members of the U.S. Armed Forces.)
- The residence of the payer determines the source of interest income
- Social Security Benefits are U.S. source income by definition IRC 861.
- For pension distributions attributable to contributions, the place where the services were performed that earned the pension determines the source of pension distributions
- For investment earnings on pension contributions, the location of the pension trust determines the source of investment earnings on pension contributions
- The location of the payer determines the source of dividend income
- The seller's tax home determines the source of income from selling personal property
- The place where title passes determines the source of income from selling purchased inventory
- Income from selling inventory produced is allocated between U.S. and non-U.S. sources
- The location of the property determines the income source from rent and natural resource royalties
- The location where the property is used determines the income source from royalties for patents or similar properties
- The residence of shareholder determines the source of capital gains distributions paid by US Regulated Investment Company (RIC)
- Where taxpayer performed the underlying services generally determines the source of unemployment compensations
