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pursuant to section 1441(a). However, interest that is treated
as income from sources without the United States is not subject
to withholding tax pursuant to section 1.1441-1, Income Tax
Regs., or, therefore, section 1.1442-1, Income Tax Regs. Sec.
1.1441-3(a), Income Tax Regs. Additionally, no tax is required
to be deducted and withheld pursuant to section 1441(a) from any
amount described in section 871(i)(2). Secs. 1441(c)(10),
1442(a).
3. Withholding Tax on Dividends
a. Character and Source Rules
for Dividends
Dividend payments made before December 31, 1986, will be
treated as income from sources within the United States if the
amount received as dividends is:
from a foreign corporation unless less than 50 percent
of the gross income from all sources of such foreign
corporation for the 3-year period ending with the close
of its taxable year preceding the declaration of such
dividends (or for such part of such period as the
corporation has been in existence) was effectively
connected with the conduct of a trade or business
within the United States; but only in an amount which
bears the same ratio to such dividends as the gross
income of the corporation for such period which was
effectively connected with the conduct of a trade or
business within the United States bears to its gross
income from all sources * * * [Sec. 861(a)(2)(B).]
b. Taxation of Dividends
Section 871(a)(1) imposes on a nonresident alien individual
a tax of 30 percent of the amount of dividends treated as income
from sources within the United States, if the amount of dividends
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