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TITLE 26-INTERNAL REVENUE CODE SUBPART A-NONRESIDENT ALIEN INDIVIDUALS Sec. 871. Tax on nonresident alien individuals. 872. Gross income. 873. Deductions. 874. Allowance of deductions and credits. 875. Partnerships; beneficiaries of estates and trusts, 876. Alien residents of Puerto Rico. 877. Expatriation to avoid tax. 878. Foreign educational, charitable, and certain other exempt organizations. 879. Tax treatment of certain community income in the case of a resident or citizen of the United States who is married to a nonresident alien in. dividual. AMENDMENTS 1976-Pub. L. 94-455, title X, § 1012(b)(3)(A), Oct. 4, 1976, 90 Stat. 1614, added item 879. 1966-Pub. L. 89-809, title I, § 103(e)(2), (f)(2), Nov. 13, 1966, 80 Stat. 1551, 1552, inserted "; beneficiaries of estates and trusts" in item 875, added item 877, and re- designated former item 877 as 878. § 871. Tax on nonresident alien individuals (a) Income not connected with United States busi. ness-30 percent tax (1) Income other than capital gains There is hereby imposed for each taxable year a tax of 30 percent of the amount re- ceived from sources within the United States by a nonresident alien individual as- (A) interest (other than original issue dis- count as defined in section 1232(b)), divi- dends, rents, salaries, wages, premiums, an- nuities, compensations, remunerations, emoluments, and other fixed or determin- able annual or periodical gains, profits, and income. (B) gains described in section 402(L.;(2), 403(a)(2), or 631(b) or (c), and gains on transfers described in section 1235 made on or before October 4, 1966, (C) in the case of- (i) bonds or other evidences of indebted- ness issued after September 28, 1965, and before April 1, 1972, amounts which under section 1232(a)(2)(B) are considered as or- dinary income, and, in the case of corpo- rate obligations issued after May 27, 1969, and before April 1, 1972, amounts which would be so considered but for the fact the obligations were issued after May 27, 1969, (i1) bonds or other evidences of indebt- edness issued after March 31, 1972, and payable more than 6 months from the date of original issue (without regard to the period held by the taxpayer), amounts which under section 1232(a)(2)(B) would be considered as ordi- nary income but for the fact such obliga- tions were issued after May 27, 1969, and (iii) the payment of interest on an obli- gation described in clause (it), an amount equal to the original issue discount (but not in excess of such interest less the tax imposed by subparagraph (A) thereon) ac- crued on such obligation since the last payment of interest thereon, and (D) gains from the sale or exchange after October 4, 1966, of patents, copyrights, secret processes and formulas, good will, trademarks, trade brands, franchises, and other like property, or of any interest in any such property, to the extent such gains are from payments which are contingent on the productivity, use, or disposition of the property or interest sold or exchanged, or from payments which are treated as being so contingent under subsection (e), but only to the extent the amount so received is not effectively connected with the conduct of a trade or business within the United States. (2) Capital gains of aliens present in the United States 183 days or more In the case of a nonresident alien individual present in the United States for a period or periods aggregating 183 days or more during the taxable year, there is hereby imposed for such year a tax of 30 percent of the amount by which his gains, derived from sources within the United States, from the sale or ex- change at any time during such ycar of cap- ital assets exceed his losses, allocable to sources within the United States, from the sale or exchange at any time during such year of capital assets. For purposes of this para- graph, gains and losses shall be taken into ac- count only if, and to the extent that, they would be recognized and taken into account if such gains and losses were effectively con- nected with the conduct of a trade or business within the United States, except that such gains and losses shall be determined without regard to section 1202 (relating to deduction for capital gains) and such losses shall be de- termined without the benefits of the capital loss carryover provided in section 1212. Any gain or loss which is taken into account in de- termining the tax under paragraph (1) or sub- section (b) shall not be taken into account in determining the tax under this paragraph. For purposes of the 183-day requirement of this paragraph, a nonresident alien individual not engaged in trade or business within the United States who has not established a tax- able year for any prior period shall be treated as having a taxable year which is the calen- dar year. (b) Income connected with United States business- graduated rate of tax (1) Imposition of tax A nonresident alien individual engaged in trade or business within the United States during the taxable year shall be taxable as provided in section 1, 402(e)(1), or 1201(b) on his taxable income which is effectively con- nected with the conduct of a trade or business within the United States. (2) Determination of taxable income In determining taxable income for purposes of paragraphl (1), gross income includes only gross income which is effectively connected with the conduct of a trade or business within the United States. (c) Participants in certain exchange or training pro- grams For purposes of this section, a nonresident alien individual who (without regard to this subsection) is not engaged in trade or business within the United States and who is temporar- § 871 Page 562