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TITLE 26-INTERNAL REVENUE CODE EFFECTIVE DATE OF 1960 AMENDMENT Amendment of subsec. (d) of this section by Pub. L. 86-437 applicable only with respect to taxable years beginning after Dec. 31, 1959, see section 3 of Pub. L. 86-437, set out as an Effective Date of 1960 Amend- ment note under section 402 of this title. EFFECTIVE DATE OF 1958 AMENDMENT Section 40(c) of Pub. L. 85-866 provided that: "The amendment made by subsection (a) [to subsec. (a)(1) of this section] shall apply only with respect to tax- able years ending after the date of the enactment of this Act [Sept. 2, 19581. The amendments made by subsection (b) [to section 1441(b), (c)(5) of this title] shall take effect on the day following the date of the enactment of this Act [Sept. 2, 1958]." Section 41(c) of Pub. L. 85-866 provided that: "The amendments made by this section [to subsec. (b) of this section and section 35(c), (d) of this title] shall apply only with respect to taxable years beginning after December 31, 1957." CROSS REFERENCES Consent dividends, nonresident aliens and foreign corporations, see section 565 of this title. Dispositions of certain stock, source of gain, see sec- tion 306 of this title. Income tax returns, persons required to make re- turns of income, see section 6012 of this title. Judicial proceedings, production of records in case of foreign corporations, foreign trusts or estates and non- resident alien individuals, see section 7456 of this title. Partial exclusion of dividends received by indivduals, certain nonresident aliens ineligible for exclusion, see section 116 of this title. Retirement income, nonresident alien ineligible for credit, see section 37 of this title. Standard deduction for individuals, nonresident alien as ineligible, see section 142 of this title. Time for filing income tax returns, nonresident aliens and foreign corporations, see section 6072 of this title. Withholding tax on- Foreign corporations, see section 1442 of this title. Nonresident aliens, see section 1441 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 2. 5, 43, 116, 306, 864, 873, 877, 881, 882, 891, 906, 1235, 1441, 1442, 6012 of this title. § 872. Gross income (a) General rule In the case of a nonresident alien individual, gross income includes only- (1) gross income which is derived from sources within the United States and which is not effectively connected with the conduct of a trade or business within the United States, and (2) gross income which is effectively con- nected with the conduct of a trade or business within the United States. (b) Exclusions The following items shall not be included in gross income of a nonresident alien individual, and shall be exempt from taxation under this subtitle: (1) Ships under foreign flag Earnings derived from the operation of a ship or ships documented under the laws of a foreign country which grants an equivalent exemption to citizens of the United States and to corporations organized in the United States. (2) Aircraft of foreign registry Earnings derived from the operation of air- craft registered under the laws of a foreign country which grants an equivalent exemp- tion to citizens of the United States and to corporations organized in the United States. (3) Compensation of participants in certain ex- change or training programs Compensation paid by a foreign employer to a nonresident alien individual for the period he is temporarily present in the United States as a nonimmigrant under subpara- graph (F) or (J) of section 101(a)(15) of the Immigration and Nationality Act, as amend- ed. For purposes of this paragraph, the term "foreign employer" means- (A) a nonresident alien individual, foreign partnership, or foreign corporation, or (B) an office or place of business main- tained in a foreign country or in a posses- sion of the United States by a domestic cor- poration, a domestic partnership, or an indi- vidual who is a citizen or resident of the United States. (4) Certain bond income of residents of the Ryukyu Islands or the Trust Territory of the Pacific Is. lands Income derived by a nonresident alien indi- vidual from a series E or series H United States savings bond, if such individual ac- quired such bond while a resident of the Ryukyu Islands or the Trust Territory of the Pacific Islands. (Aug. 16, 1954, ch. 736, 68 A Stat. 280; Sept. 21, 1961, Pub. L. 87-256, § 110(c), 75 Stat. 536; Nov. 13, 1966, Pub. L. 89-809, title I, § 103(b), 80 Stat. 1550.) REFERENCES IN TEXT Section 101 of the Immigration and Nationality Act, referred to in subsec. (b)(3), is classified to section 1101 of Title 8, Aliens and Nationality. AMENDMENTS 1966-Subsec. (a). Pub. L. 89-809, § 103(b)(1), limited the inclusion of gross income which is derived from sources within the United States to such income which is not effectively connected with the conduct of a trade or business within the United States and added provision including gross income without the limita- tion as to source which is effectively connected with the conduct of a trade or business within the United States. Subsec. (b)(3)(B). Pub. L. 89-809, § 103(b)(2), substi- tuted "by a domestic corporation, a domestic partner- ship, or an individual who is a citizen or resident of the United States" for "by a domestic corporation". Subsec. (b)(4). Pub. L. 89-809. § 102(b)(3), added par. (4). 1961-Subsec. (b). Pub. L. 87-256 added par. (3). EFFECTIVE DATE OF 1966 AMENDMENT Amendment by Pub. L. 89-809 applicable with re- spect to taxable years beginning after Dec. 31, 1966, see section 103(n)(1) of Pub. L. 89-809, set out as an Effective Date of 1966 Amendment note under section 871 of this title. EFFECTIVE DATE OF 1961 AMENDMENT Amendment by Pub. L. 87-256 applicable to taxable years beginning after Dec. 31, 1961, see section 110(h)(1) of Pub. L. 87-256, set out as an Effective Date of 1961 Amendment note under section 117 of this title. 71-999 O - 78 - 38 (Vol. 7) Page 565