The Internal Revenue Service has issued final regulations for determining whether income is derived from sources within a U.S. possession or territory, and whether it is effectively connected with the conduct of a trade or business within a territory.

The U.S. tax consequences of classifying income as being from sources within a territory or as being effectively connected income vary from territory to territory. Section 937(b)(1) of the Tax Code expressly grants the Treasury Department and the IRS the regulatory authority to provide exceptions to the general territory source rule, which otherwise applies sourcing principles similar to those of the U.S. source rules.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access