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Hr block 2. Hr block   Source of Income Table of Contents Introduction Topics - This chapter discusses: Resident Aliens Nonresident AliensInterest Income Dividends Guarantee of Indebtedness Personal Services Transportation Income Scholarships, Grants, Prizes, and Awards Pensions and Annuities Rents or Royalties Real Property Personal Property Community Income Introduction After you have determined your alien status, you must determine the source of your income. Hr block This chapter will help you determine the source of different types of income you may receive during the tax year. Hr block This chapter also discusses special rules for married individuals who are domiciled in a country with community property laws. Hr block Topics - This chapter discusses: Income source rules, and Community income. Hr block Resident Aliens A resident alien's income is generally subject to tax in the same manner as a U. Hr block S. Hr block citizen. Hr block If you are a resident alien, you must report all interest, dividends, wages, or other compensation for services, income from rental property or royalties, and other types of income on your U. Hr block S. Hr block tax return. Hr block You must report these amounts from sources within and outside the United States. Hr block Nonresident Aliens A nonresident alien usually is subject to U. Hr block S. Hr block income tax only on U. Hr block S. Hr block source income. Hr block Under limited circumstances, certain foreign source income is subject to U. Hr block S. Hr block tax. Hr block See Foreign Income in chapter 4. Hr block The general rules for determining U. Hr block S. Hr block source income that apply to most nonresident aliens are shown in Table 2-1. Hr block The following discussions cover the general rules as well as the exceptions to these rules. Hr block Not all items of U. Hr block S. Hr block source income are taxable. Hr block See chapter 3. Hr block Interest Income Generally, U. Hr block S. Hr block source interest income includes the following items. Hr block Interest on bonds, notes, or other interest-bearing obligations of U. Hr block S. Hr block residents or domestic corporations. Hr block Interest paid by a domestic or foreign partnership or foreign corporation engaged in a U. Hr block S. Hr block trade or business at any time during the tax year. Hr block Original issue discount. Hr block Interest from a state, the District of Columbia, or the U. Hr block S. Hr block Government. Hr block The place or manner of payment is immaterial in determining the source of the income. Hr block A substitute interest 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 the interest on the transferred security. Hr block Exceptions. Hr block   U. Hr block S. Hr block source interest income does not include the following items. Hr block Interest paid by a resident alien or a domestic corporation on obligations issued before August 10, 2010, if for the 3-year period ending with the close of the payer's tax year preceding the interest payment, at least 80% of the payer's total gross income: Is from sources outside the United States, and Is attributable to the active conduct of a trade or business by the individual or corporation in a foreign country or a U. Hr block S. Hr block possession. Hr block However, the interest will be considered U. Hr block S. Hr block source interest income if either of the following apply. Hr block The recipient of the interest is related to the resident alien or domestic corporation. Hr block See section 954(d)(3) for the definition of related person. Hr block The terms of the obligation are significantly modified after August 9, 2010. Hr block Any extension of the term of the obligation is considered a significant modification. Hr block Interest paid by a foreign branch of a domestic corporation or a domestic partnership on deposits or withdrawable accounts with mutual savings banks, cooperative banks, credit unions, domestic building and loan associations, and other savings institutions chartered and supervised as savings and loan or similar associations under federal or state law if the interest paid or credited can be deducted by the association. Hr block Interest on deposits with a foreign branch of a domestic corporation or domestic partnership, but only if the branch is in the commercial banking business. Hr block Dividends In most cases, dividend income received from domestic corporations is U. Hr block S. Hr block source income. Hr block Dividend income from foreign corporations is usually foreign source income. Hr block Exceptions to both of these rules are discussed below. Hr block 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. Hr block Dividend equivalent payments. Hr block   U. Hr block S. Hr block source dividends also include all dividend equivalent payments. Hr block 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. Hr block S. Hr block sources. Hr block    The Internal Revenue Service has issued final regulations that would affect the treatment of dividend equivalent payments and specified notional principal contracts. Hr block You can view this regulation at www. Hr block irs. Hr block gov/irb/2013-52_IRB/ar08. Hr block html. Hr block First exception. Hr block   Dividends received from a domestic corporation are not U. Hr block S. Hr block source income if the corporation elects to take the American Samoa economic development credit. Hr block Second exception. Hr block   Part of the dividends received from a foreign corporation is U. Hr block S. Hr block 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. Hr block If the corporation was formed less than 3 years before the declaration, use its total gross income from the time it was formed. Hr block Determine the part that is U. Hr block S. Hr block source income by multiplying the dividend by the following fraction. Hr block   Foreign corporation's gross income connected with a U. Hr block S. Hr block trade or business for the 3-year period     Foreign corporation's gross income from all sources for that period   Guarantee of Indebtedness Certain amounts received directly or indirectly, for the provision of a guarantee of indebtedness issued after September 27, 2010, are U. Hr block S. Hr block source income. Hr block They must be paid by a noncorporate resident or U. Hr block S. Hr block corporation or by any foreign person if the amounts are effectively connected with the conduct of a U. Hr block S. Hr block trade or business. Hr block For more information, see Internal Revenue Code sections 861(a)(9) and 862(a)(9). Hr block Personal Services All wages and any other compensation for services performed in the United States are considered to be from sources in the United States. Hr block The only exceptions to this rule are discussed in chapter 3 under Employees of foreign persons, organizations, or offices, and under Crew members. Hr block If you are an employee and receive compensation for labor or personal services performed both inside and outside the United States, special rules apply in determining the source of the compensation. Hr block Compensation (other than certain fringe benefits) is sourced on a time basis. Hr block Certain fringe benefits (such as housing and education) are sourced on a geographical basis. Hr block Or, you may be permitted to use an alternative basis to determine the source of compensation. Hr block See Alternative Basis , later. Hr block Multi-level marketing. Hr block   Certain companies sell products through a multi-level marketing arrangement, such that an upper-tier distributor, who has sponsored a lower-tier distributor, is entitled to a payment from the company based on certain activities of that lower-tier distributor. Hr block Generally, depending on the facts, payments from such multi-level marketing companies to independent (non-employee) distributors (upper-tier distributors) that are based on the sales or purchases of persons whom they have sponsored (lower-tier distributors) constitute income for the performance of personal services in recruiting, training, and supporting the lower-tier distributors. Hr block The source of such income is generally based on where the services of the upper-tier distributor are performed, and may, depending on the facts, be considered multi-year compensation, with the source of income determined over the period to which such compensation is attributable. Hr block Self-employed individuals. Hr block   If you are self-employed, you determine the source of compensation for labor or personal services from self-employment on the basis that most correctly reflects the proper source of that income under the facts and circumstances of your particular case. Hr block In many cases, the facts and circumstances will call for an apportionment on a time basis as explained next. Hr block Time Basis Use a time basis to figure your U. Hr block S. Hr block source compensation (other than the fringe benefits discussed later). Hr block Do this by multiplying your total compensation (other than the fringe benefits discussed later) by the following fraction:   Number of days you performed services in the United States during the year     Total number of days you performed services during the year   You can use a unit of time less than a day in the above fraction, if appropriate. Hr block The time period for which the compensation is made does not have to be a year. Hr block Instead, you can use another distinct, separate, and continuous time period if you can establish to the satisfaction of the IRS that this other period is more appropriate. Hr block Example 1. Hr block Christina Brooks, a resident of the Netherlands, worked 240 days for a U. Hr block S. Hr block company during the tax year. Hr block She received $80,000 in compensation. Hr block None of it was for fringe benefits. Hr block Christina performed services in the United States for 60 days and performed services in the Netherlands for 180 days. Hr block Using the time basis for determining the source of compensation, $20,000 ($80,000 × 60/240) is her U. Hr block S. Hr block source income. Hr block Example 2. Hr block Rob Waters, a resident of South Africa, is employed by a corporation. Hr block His annual salary is $100,000. Hr block None of it is for fringe benefits. Hr block During the first quarter of the year he worked entirely within the United States. Hr block On April 1, Rob was transferred to Singapore for the remainder of the year. Hr block Rob is able to establish that the first quarter of the year and the last 3 quarters of the year are two separate, distinct, and continuous periods of time. Hr block Accordingly, $25,000 of Rob's annual salary is attributable to the first quarter of the year (. Hr block 25 × $100,000). Hr block All of it is U. Hr block S. Hr block source income because he worked entirely within the United States during that quarter. Hr block The remaining $75,000 is attributable to the last three quarters of the year. Hr block During those quarters, he worked 150 days in Singapore and 30 days in the United States. Hr block His periodic performance of services in the United States did not result in distinct, separate, and continuous periods of time. Hr block Of this $75,000, $12,500 ($75,000 × 30/180) is U. Hr block S. Hr block source income. Hr block Multi-year compensation. Hr block   The source of multi-year compensation is generally determined on a time basis over the period to which the compensation is attributable. Hr block Multi-year compensation is compensation that is included in your income in one tax year but that is attributable to a period that includes two or more tax years. Hr block   You determine the period to which the compensation is attributable based on the facts and circumstances of your case. Hr block For example, an amount of compensation that specifically relates to a period of time that includes several calendar years is attributable to the entire multi-year period. Hr block   The amount of compensation treated as from U. Hr block S. Hr block sources is figured by multiplying the total multi-year compensation by a fraction. Hr block The numerator of the fraction is the number of days (or unit of time less than a day, if appropriate) that you performed labor or personal services in the United States in connection with the project. Hr block The denominator of the fraction is the total number of days (or unit of time less than a day, if appropriate) that you performed labor or personal services in connection with the project. Hr block Geographical Basis Compensation you receive as an employee in the form of the following fringe benefits is sourced on a geographical basis. Hr block Housing. Hr block Education. Hr block Local transportation. Hr block Tax reimbursement. Hr block Hazardous or hardship duty pay as defined in Regulations section 1. Hr block 861-4(b)(2)(ii)(D)(5). Hr block Moving expense reimbursement. Hr block The amount of fringe benefits must be reasonable and you must substantiate them by adequate records or by sufficient evidence. Hr block Principal place of work. Hr block   The above fringe benefits, except for tax reimbursement and hazardous or hardship duty pay, are sourced based on your principal place of work. Hr block Your principal place of work is usually the place where you spend most of your working time. Hr block This could be your office, plant, store, shop, or other location. Hr block If there is no one place where you spend most of your working time, your main job location is the place where your work is centered, such as where you report for work or are otherwise required to “base” your work. Hr block   If you have more than one job at any time, your main job location depends on the facts in each case. Hr block The more important factors to be considered are: The total time you spend at each place, The amount of work you do at each place, and How much money you earn at each place. Hr block Housing. Hr block   The source of a housing fringe benefit is determined based on the location of your principal place of work. Hr block A housing fringe benefit includes payments to you or on your behalf (and your family's if your family resides with you) only for the following. Hr block Rent. Hr block Utilities (except telephone charges). Hr block Real and personal property insurance. Hr block Occupancy taxes not deductible under section 164 or 216(a). Hr block Nonrefundable fees for securing a leasehold. Hr block Rental of furniture and accessories. Hr block Household repairs. Hr block Residential parking. Hr block Fair rental value of housing provided in kind by your employer. Hr block   A housing fringe benefit does not include: Deductible interest and taxes (including deductible interest and taxes of a tenant-stockholder in a cooperative housing corporation), The cost of buying property, including principal payments on a mortgage, The cost of domestic labor (maids, gardeners, etc. Hr block ), Pay television subscriptions, Improvements and other expenses that increase the value or appreciably prolong the life of property, Purchased furniture or accessories, Depreciation or amortization of property or improvements, The value of meals or lodging that you exclude from gross income, or The value of meals or lodging that you deduct as moving expenses. Hr block Education. Hr block   The source of an education fringe benefit for the education expenses of your dependents is determined based on the location of your principal place of work. Hr block An education fringe benefit includes payments only for the following expenses for education at an elementary or secondary school. Hr block Tuition, fees, academic tutoring, special needs services for a special needs student, books, supplies, and other equipment. Hr block Room and board and uniforms that are required or provided by the school in connection with enrollment or attendance. Hr block Local transportation. Hr block   The source of a local transportation fringe benefit is determined based on the location of your principal place of work. Hr block Your local transportation fringe benefit is the amount that you receive as compensation for local transportation for you or your spouse or dependents at the location of your principal place of work. Hr block The amount treated as a local transportation fringe benefit is limited to actual expenses incurred for local transportation and the fair rental value of any employer-provided vehicle used predominantly by you, your spouse, or your dependents for local transportation. Hr block Actual expenses do not include the cost (including interest) of any vehicle purchased by you or on your behalf. Hr block Tax reimbursement. Hr block   The source of a tax reimbursement fringe benefit is determined based on the location of the jurisdiction that imposed the tax for which you are reimbursed. Hr block Moving expense reimbursement. Hr block   The source of a moving expense reimbursement is generally based on the location of your new principal place of work. Hr block However, the source is determined based on the location of your former principal place of work if you provide sufficient evidence that such determination of source is more appropriate under the facts and circumstances of your case. Hr block Sufficient evidence generally requires an agreement between you and your employer, or a written statement of company policy, which is reduced to writing before the move and which is entered into or established to induce you or other employees to move to another country. Hr block The written statement or agreement must state that your employer will reimburse you for moving expenses that you incur to return to your former principal place of work regardless of whether you continue to work for your employer after returning to that location. Hr block It may contain certain conditions upon which the right to reimbursement is determined as long as those conditions set forth standards that are definitely ascertainable and can only be fulfilled prior to, or through completion of, your return move to your former principal place of work. Hr block Alternative Basis If you are an employee, you can determine the source of your compensation under an alternative basis if you establish to the satisfaction of the IRS that, under the facts and circumstances of your case, the alternative basis more properly determines the source of your compensation than the time or geographical basis. Hr block If you use an alternative basis, you must keep (and have available for inspection) records to document why the alternative basis more properly determines the source of your compensation. Hr block Also, if your total compensation from all sources is $250,000 or more, check “Yes” to both questions on line K on page 5 of Form 1040NR, and attach a written statement to your tax return that sets forth all of the following. Hr block Your name and social security number (written across the top of the statement). Hr block The specific compensation income, or the specific fringe benefit, for which you are using the alternative basis. Hr block For each item in (2), the alternative basis of allocation of source used. Hr block For each item in (2), a computation showing how the alternative allocation was computed. Hr block A comparison of the dollar amount of the U. Hr block S. Hr block compensation and foreign compensation sourced under both the alternative basis and the time or geographical basis discussed earlier. Hr block Transportation Income Transportation income is income from the use of a vessel or aircraft or for the performance of services directly related to the use of any vessel or aircraft. Hr block This is true whether the vessel or aircraft is owned, hired, or leased. Hr block The term “vessel or aircraft” includes any container used in connection with a vessel or aircraft. Hr block All income from transportation that begins and ends in the United States is treated as derived from sources in the United States. Hr block If the transportation begins or ends in the United States, 50% of the transportation income is treated as derived from sources in the United States. Hr block For transportation income from personal services, 50% of the income is U. Hr block S. Hr block source income if the transportation is between the United States and a U. Hr block S. Hr block possession. Hr block For nonresident aliens, this only applies to income derived from, or in connection with, an aircraft. Hr block For information on how U. Hr block S. Hr block source transportation income is taxed, see chapter 4. Hr block Scholarships, Grants, Prizes, and Awards Generally, the source of scholarships, fellowship grants, grants, prizes, and awards is the residence of the payer regardless of who actually disburses the funds. Hr block However, see Activities to be performed outside the United States , later. Hr block For example, payments for research or study in the United States made by the United States, a noncorporate U. Hr block S. Hr block resident, or a domestic corporation, are from U. Hr block S. Hr block sources. Hr block Similar payments from a foreign government or foreign corporation are foreign source payments even though the funds may be disbursed through a U. Hr block S. Hr block agent. Hr block Payments made by an entity designated as a public international organization under the International Organizations Immunities Act are from foreign sources. Hr block Activities to be performed outside the United States. Hr block   Scholarships, fellowship grants, targeted grants, and achievement awards received by nonresident aliens for activities performed, or to be performed, outside the United States are not U. Hr block S. Hr block source income. Hr block    These rules do not apply to amounts paid as salary or other compensation for services. Hr block See Personal Services, earlier, for the source rules that apply. Hr block Pensions and Annuities If you receive a pension from a domestic trust for services performed both in and outside the United States, part of the pension payment is from U. Hr block S. Hr block sources. Hr block That part is the amount attributable to earnings of the pension plan and the employer contributions made for services performed in the United States. Hr block This applies whether the distribution is made under a qualified or nonqualified stock bonus, pension, profit-sharing, or annuity plan (whether or not funded). Hr block If you performed services as an employee of the United States, you may receive a distribution from the U. Hr block S. Hr block Government under a plan, such as the Civil Service Retirement System, that is treated as a qualified pension plan. Hr block Your U. Hr block S. Hr block source income is the otherwise taxable amount of the distribution that is attributable to your total U. Hr block S. Hr block Government basic pay other than tax-exempt pay for services performed outside the United States. Hr block Rents or Royalties Your U. Hr block S. Hr block source income includes rent and royalty income received during the tax year from property located in the United States or from any interest in that property. Hr block U. Hr block S. Hr block source income also includes rents or royalties for the use of, or for the privilege of using, in the United States, intangible property such as patents, copyrights, secret processes and formulas, goodwill, trademarks, franchises, and similar property. Hr block Real Property Real property is land and buildings and generally anything built on, growing on, or attached to land. Hr block Gross income from sources in the United States includes gains, profits, and income from the sale or other disposition of real property located in the United States. Hr block Natural resources. Hr block   The income from the sale of products of any farm, mine, oil or gas well, other natural deposit, or timber located in the United States and sold in a foreign country, or located in a foreign country and sold in the United States, is partly from sources in the United States. Hr block For information on determining that part, see section 1. Hr block 863-1(b) of the regulations. Hr block Table 2-1. Hr block Summary of Source Rules for Income of Nonresident Aliens Item of income Factor determining source Salaries, wages, other compensation Where services performed Business income:   Personal services Where services performed Sale of inventory—purchased Where sold Sale of inventory—produced Allocation Interest Residence of payer Dividends Whether a U. Hr block S. Hr block or foreign corporation* Rents Location of property Royalties:   Natural resources Location of property Patents, copyrights, etc. Hr block Where property is used Sale of real property Location of property Sale of personal property Seller's tax home (but see Personal Property , later, for exceptions) Pension distributions attributable to contributions Where services were performed that earned the pension Investment earnings on pension contributions Location of pension trust Sale of natural resources Allocation based on fair market value of product at export terminal. Hr block For more information, see section 1. Hr block 863-1(b) of the regulations. Hr block *Exceptions include: a) Dividends paid by a U. Hr block S. Hr block corporation are foreign source if the corporation elects the  American Samoa economic development credit. Hr block  b) Part of a dividend paid by a foreign corporation is U. Hr block S. Hr block source if at least 25% of the  corporation's gross income is effectively connected with a U. Hr block S. Hr block trade or business for the  3 tax years before the year in which the dividends are declared. Hr block Personal Property Personal property is property, such as machinery, equipment, or furniture, that is not real property. Hr block Gain or loss from the sale or exchange of personal property generally has its source in the United States if you have a tax home in the United States. Hr block If you do not have a tax home in the United States, the gain or loss generally is considered to be from sources outside the United States. Hr block Tax home. Hr block   Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. Hr block Your tax home is the place where you permanently or indefinitely work as an employee or a self-employed individual. Hr block If you do not have a regular or main place of business because of the nature of your work, then your tax home is the place where you regularly live. Hr block If you do not fit either of these categories, you are considered an itinerant and your tax home is wherever you work. Hr block Inventory property. Hr block   Inventory property is personal property that is stock in trade or that is held primarily for sale to customers in the ordinary course of your trade or business. Hr block Income from the sale of inventory that you purchased is sourced where the property is sold. Hr block Generally, this is where title to the property passes to the buyer. Hr block For example, income from the sale of inventory in the United States is U. Hr block S. Hr block source income, whether you purchased it in the United States or in a foreign country. Hr block   Income from the sale of inventory property that you produced in the United States and sold outside the United States (or vice versa) is partly from sources in the United States and partly from sources outside the United States. Hr block For information on making this allocation, see section 1. Hr block 863-3 of the regulations. Hr block   These rules apply even if your tax home is not in the United States. Hr block Depreciable property. Hr block   To determine the source of any gain from the sale of depreciable personal property, you must first figure the part of the gain that is not more than the total depreciation adjustments on the property. Hr block You allocate this part of the gain to sources in the United States based on the ratio of U. Hr block S. Hr block depreciation adjustments to total depreciation adjustments. Hr block The rest of this part of the gain is considered to be from sources outside the United States. Hr block   For this purpose, “U. Hr block S. Hr block depreciation adjustments” are the depreciation adjustments to the basis of the property that are allowable in figuring taxable income from U. Hr block S. Hr block sources. Hr block However, if the property is used predominantly in the United States during a tax year, all depreciation deductions allowable for that year are treated as U. Hr block S. Hr block depreciation adjustments. Hr block But there are some exceptions for certain transportation, communications, and other property used internationally. Hr block   Gain from the sale of depreciable property that is more than the total depreciation adjustments on the property is sourced as if the property were inventory property, as discussed above. Hr block   A loss is sourced in the same way as the depreciation deductions were sourced. Hr block However, if the property was used predominantly in the United States, the entire loss reduces U. Hr block S. Hr block source income. Hr block   The basis of property usually means the cost (money plus the fair market value of other property or services) of property you acquire. Hr block Depreciation is an amount deducted to recover the cost or other basis of a trade or business asset. Hr block The amount you can deduct depends on the property's cost, when you began using the property, how long it will take to recover your cost, and which depreciation method you use. Hr block A depreciation deduction is any deduction for depreciation or amortization or any other allowable deduction that treats a capital expenditure as a deductible expense. Hr block Intangible property. Hr block   Intangible property includes patents, copyrights, secret processes or formulas, goodwill, trademarks, trade names, or other like property. Hr block The gain from the sale of amortizable or depreciable intangible property, up to the previously allowable amortization or depreciation deductions, is sourced in the same way as the original deductions were sourced. Hr block This is the same as the source rule for gain from the sale of depreciable property. Hr block See Depreciable property , earlier, for details on how to apply this rule. Hr block   Gain in excess of the amortization or depreciation deductions is sourced in the country where the property is used if the income from the sale is contingent on the productivity, use, or disposition of that property. Hr block If the income is not contingent on the productivity, use, or disposition of the property, the income is sourced according to your tax home as discussed earlier. Hr block If payments for goodwill do not depend on its productivity, use, or disposition, their source is the country in which the goodwill was generated. Hr block Sales through offices or fixed places of business. Hr block   Despite any of the earlier rules, if you do not have a tax home in the United States, but you maintain an office or other fixed place of business in the United States, treat the income from any sale of personal property (including inventory property) that is attributable to that office or place of business as U. Hr block S. Hr block source income. Hr block However, this rule does not apply to sales of inventory property for use, disposition, or consumption outside the United States if your office or other fixed place of business outside the United States materially participated in the sale. Hr block   If you have a tax home in the United States but maintain an office or other fixed place of business outside the United States, income from sales of personal property, other than inventory, depreciable property, or intangibles, that is attributable to that foreign office or place of business may be treated as U. Hr block S. Hr block source income. Hr block The income is treated as U. Hr block S. Hr block source income if an income tax of less than 10% of the income from the sale is paid to a foreign country. Hr block This rule also applies to losses if the foreign country would have imposed an income tax of less than 10% had the sale resulted in a gain. Hr block Community Income If you are married and you or your spouse is subject to the community property laws of a foreign country, a U. Hr block S. Hr block state, or a U. Hr block S. Hr block possession, you generally must follow those laws to determine the income of yourself and your spouse for U. Hr block S. Hr block tax purposes. Hr block But you must disregard certain community property laws if: Both you and your spouse are nonresident aliens, or One of you is a nonresident alien and the other is a U. Hr block S. Hr block citizen or resident and you do not both choose to be treated as U. Hr block S. Hr block residents as explained in chapter 1. Hr block In these cases, you and your spouse must report community income as explained later. Hr block Earned income. Hr block   Earned income of a spouse, other than trade or business income and a partner's distributive share of partnership income, is treated as the income of the spouse whose services produced the income. Hr block That spouse must report all of it on his or her separate return. Hr block Trade or business income. Hr block   Trade or business income, other than a partner's distributive share of partnership income, is treated as the income of the spouse carrying on the trade or business. Hr block That spouse must report all of it on his or her separate return. Hr block Partnership income (or loss). Hr block   A partner's distributive share of partnership income (or loss) is treated as the income (or loss) of the partner. Hr block The partner must report all of it on his or her separate return. Hr block Separate property income. Hr block   Income derived from the separate property of one spouse (and which is not earned income, trade or business income, or partnership distributive share income) is treated as the income of that spouse. Hr block That spouse must report all of it on his or her separate return. Hr block Use the appropriate community property law to determine what is separate property. Hr block Other community income. Hr block   All other community income is treated as provided by the applicable community property laws. Hr block Prev  Up  Next   Home   More Online Publications
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Hr block Publication 595 - Introductory Material Table of Contents Introduction Important Reminder Introduction This publication discusses the Capital Construction Fund (CCF). Hr block The CCF is a special investment program administered by the National Marine Fisheries Service (NMFS) and the Internal Revenue Service (IRS). Hr block This program allows fishermen to defer paying income tax on certain income they invest in a CCF account and later use to acquire, build, or rebuild fishing vessels. Hr block This publication does not discuss all the tax rules that may apply to your fishing trade or business. Hr block For general information about the federal tax laws that apply to individuals, including commercial fishermen, who file Schedule C or C-EZ, see Publication 334, Tax Guide for Small Business. Hr block If your trade or business is a partnership or corporation, see Publication 541, Partnerships, or Publication 542, Corporations. Hr block Comments and suggestions. Hr block   We welcome your comments about this publication and your suggestions for future editions. Hr block   You can email us at *taxforms@irs. Hr block gov. Hr block Please put “Publications Comment” on the subject line. Hr block   You can write to us at the following address: Internal Revenue Service Business Forms and Publications Branch SE:W:CAR:MP:T:B 1111 Constitution Ave. Hr block NW, IR-6406 Washington, DC 20224   We respond to many letters by telephone. Hr block Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Hr block Important Reminder Photographs of missing children. Hr block  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Hr block Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Hr block You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Hr block Prev  Up  Next   Home   More Online Publications