Page 567

TITLE 26-INTERNAL REVENUE CODE 1965-Subsec. (a). Pub. L. 89-44 inserted "or the credit provided by section 39 for certain uses of gaso- line and lubricating oil" before the period at the end. EFFECTIVE DATE OF 1970 AMENDMENT Amendment by Pub. L. 91-258 effective on July 1, 1970, see section 211(a) of Pub. L. 91-258, set out as an Effective Date of 1970 Amendment note under section 4041 of this title. EFFECTIVE DATE OF 1966 AMENDMENT Amendment of subsec. (a) by Pub. L. 81-809 applica- ble with respect 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. Section 106(a)(6) of Pub. L. 89-809 provided that: "The amendments made by this subsection [adding sections 901(b)(4) and 906 of this title and amending subsec. c) of this section] shall apply with respect to taxable years beginning after Dec. 31, 1966. In apply- ing section 904 of the Internal Revenue Code of 1954 [section 904 of this title] with respect to section 906 of such Code [section 906 of this title], no amount may be carried from or to any taxable year beginning before Jan. 1, 1967, and no such year shall be taken into account." EFFECTIVE DATE OF 1965 AMENDMENT Amendment of subsec. (a) by Pub. L. 89-44 applica- ble to taxable years beginning on or after July 1, 1965, see section 809(f) of Pub. L. 89-44, set out as an Effec- tive Date of 1966 Amendment note under section 6420 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 1441, 1451 of this title. § 875. Partnerships; beneficiaries of estates and trusts For purposes of this subtitle- (1) a nonresident alien individual or foreign corporation shall be considered as being en- gaged in a trade or business within the United States if the partnership of which such indi- vidual or corporation is a member is so en- gaged, and (2) a nonresident alien individual or foreign corporation which is a beneficiary of an estate or trust which is engaged in any trade or business within the United States shall be treated as being engaged in such trade or business within the United States. (Aug. 1E. 1954, ch. 736, 68A Stat. 281; Nov. 13, 1966, Pub. L. 89-809, title I, § 103(e)(1), 80 Stat. 1551.) AMENDMENTS 1966-Pub. L. 89-809 designated existing provisions as par. (1). substituted reference to nonresident alien individuals or foreign corporations for reference simply to nonresident alien individuals in par. (1) as so designated, and added par. (2). 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. § 876. Alien residents of Puerto Rico (a) No application to certain alien residents of Puerto Rico This subpart shall not apply to an alien indi- vidual who is a bona fide resident of Puerto Rico during the entire taxable year, and such alien shall be subject to the tax imposed by sec- tion 1. (b) Cross reference For exclusion from gross income of income derived from sources within Puerto Rico, see section 933. (Aug. 16, 1954, ch. 736, 68A Stat. 281.) SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in section 901 of this title. § 877. Expatriation to avoid tax (a) In general Every nonresident alien individual who at any time after March 8, 1965, and within the 10- year period immediately preceding the close of the taxable year lost United States citizenship, unless such loss did not have for one of its prin- cipal purposes the avoidance of taxes under this subtitle or subtitle B, shall be taxable for such taxable year in the manner provided in subsection (b) if the tax imposed pursuant to such subsection exceeds the tax which, without regard to this section, is imposed pursuant to section 871. (b) Alternative tax A nonresident alien individual described in subsection (a) shall be taxable for the taxable year as provided in section 1, 402(e)(1), or sec- tion 1201(b), except that- (1) the gross income shall include only the gross income described in section 872(a) (as modified by subsection (W) of this section), and (2) the deductions shall be allowed if and to the extent that they are connected with the gross income included under this section, except that the capital loss carryover pro- vided by section 1212(b) shall not be allowed; and the proper allocation and apportionment of the deductions for this purpose shall be de- termined as provided under regulations pre- scribed by the Secretary. For purposes of paragraph (2), the deductions allowed by section 873(b) shall be allowed; and the deduction (for losses not connected with the trade or business if incurred in transactions entered into for profit) allowed by section 165(c)(2) shall be allowed, but only if the profit, if such transaction had resulted in a profit, would be included in gross income under this section. (c) Special rules of source For purposes of subsection (b), the following items of gross income shall be treated as income from sources within the United States: (I) Sale of property Gains on the sale or exchange of property (other than stock or debt obligations) located in the United States. (2) Stock or debt obligations Gains on the sale or exchange of stock issued by a domestic corporation or debt obli- gations of United States persons or of the United States, a State or political subdivision thereof, or the District of Columbia. Page 567