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TITLE 26-INTERNAL REVENUE CODE SUBPART B-FOREIGN CORPORATIONS 881. Tax on income of foreign corporations not con- nected with United States business. 882. Tax on income of foreign corporations connected with United States business. 883. Exclusions from gross income. 884. Cross references. AMENDMENTS 1966-Pub. L. 89-809, title I, § 104(b)(3), Nov. 13. 1966, 80 Stat. 1557, substituted "Tax on income of for- eign corporations not connected with United States business" for "Tax on foreign corporations not en- gaged in business in United States" in item 881, and "Tax on income of foreign corporations connected with United States business" for "Tax on resident for- eign corporations" In item 882. § 881. Tax on income of foreign corporations not con- nected with United States business (a) Imposition of tax There is hereby imposed for each taxable year a tax of 30 percent of the amount received from sources within the United States by a for. eign corporation as- (1) interest (other than original issue dis- cbunt as defined in section 1232(b)), divi- dends, rents, salaries, wages, premiums, annu- ities, compensations, remunerations, emolu- ments, and other fixed or determinable annual or periodical gains, profits, and income, (2) gains described in section 631(b) or (c), (3) in the case of- (A) 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 ordi- nary income, and, in the case of corporate obligations issued after May 27, 1969, and before April 1, 1972, amounts which would be so considered but for the fact the obliga- tions were issued after May 27, 1969, (B) bonds or other evidences of indebted- ness issued after March 31, 1972, and pay- able more than 6 months from the date of original issue (without regard to the period held by the taxpayer), amourits which under section 1232(a)(2)(B) would be con- sidered as ordinary income but for the fact such obligations were issued after May 27, 1969, and (C) the payment of interest on an obliga- tion described in subparagraph (B), an amount equal to the original issue discount (but not in excess of such interest less the tax imposed by paragraph (1) thereon) ac- crued on such obligation since the last pay- ment of interest thereon, and (4) gains from the sale or exchange after October 4, 1966, of patents, copyrights, secret processes and formulas, good will, trade- marks, 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 pro- ductivity, use, or disposition of the property or interest sold or exchanged, or from pay- ments which are treated as being so contin- gent under section 871(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. (b) Exception for Guam corporations For purposes of this section, the term "for- eign corporation" does not Include a corpora- tion created or organized in Guam or under the law of Guam. (c) Doubling of tax For doubling of tax on corporations of certain foreign countries, see section 891. (Aug. 16, 1954, ch. 736, 68A Stat. 282; Nov. 13, 1966, Pub. L. 89-809, title I, § 104(a), 80 Stat. 1555; Dec. 10, 1971, Pub. L. 92-178, title III, § 313(a), (c), 85 Stat. 526, 527; Oct. 31, 1972, Pub. L. 92-606, § l(e)(1), 86 Stat. 1497; Oct. 4, 1976, Pub. L. 94-455, title XIX, § 1901(b)(3)(I), 90 Stat. 1793.) AMENDMENTS 1976-Subsec. (a)(3)(A), (B). Pub. L. 94-455 substitut- ed "ordinary income" for "gain from the sale or ex- change of property which is not a capital asset". 1972-Subsec. (b). Pub. L. 92-606 added subsec. (b). Former subsec. (b) redesignated (c). Subsec. (c). Pub. L. 92-606 redesignated former subsec. (b) as (c). 1971-Subsec. (a)(1). Pub. L. 92-178, § 313(a), insert- ed after "interest" the parenthetical phrase "(other than original issue discount as defined in section 1232(b))". Subsec. (a)(3). Pub. L. 92-178, § 313(c), designated ex- isting provisions as subpar. (A), inserted therein "and before April 1, 1972," after "September 28, 1965,", sub- stituted "section 1232(a)(2)(B)" for "section 1232", and inserted ", in the case of corporate obligations issued after May 27, 1969, and before April 1, 1972, amounts which would be so considered but for the fact that the obligations were issued after May 27, 1969.", and added subpars. (B) and (C). 1966-Subsec. (a). Pub. L. 89-809 substantially re- vised the income tax treatment of foreign corpora- tions, substituted the concept of amounts received from sources within the United States by foreign cor- porations but not effectively connected with the con- duct of a trade or business within the United States for the concept of amounts received from sources within the United States by foreign corporations not engaged in trade or business within the United States as the amount upon which the existing 30 percent levy should be imposed, and added contingent income re- ceived from the sale of patents and other intangibles and amounts of original issue discount which are treated as ordinary income received on retirement or sale or exchange of bonds or other evidences of Indebt- edness issued after Sept. 28, 1965, to the specified types of fixed or determinable income. EFFECTIVE DATE OF 1976 AMENDMENT Amendment of subsec. (a)(3)(A), (B) by Pub. L. 94- 455 effective for taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note under sec- tion 2 of this title. EFFECTIVE DATE OF 1972 AMENDMENT Section 2 of Pub. L. 92-606 provided in part that: "The amendments made by section 1(e)(1) [adding subsec. (b) to this section] shall apply with respect to taxable years beginning after December 31, 1971." EFFECTIVE DATE OF 1971 AMENDMENT Amendment of subsec. (a)(1) and (3) of this section by Pub. L. 92-178 applicable with respect to taxable years beginning after Dec. 31, 1966, see section 313(f) of Pub. L. 92-178, set out as an Effective Date of 1971 Amendment note under section 871 of this title. Page 569