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Sec. 882(a)(1). Effectively connected income can originate from
sources within the United States, sec. 864(c)(2) and (3), or from
sources without the United States, sec. 864(c)(4), and is taxed
at the same rates that apply to a U.S. corporation under section
11. Under the second regime, a flat tax of 30 percent is imposed
on a foreign corporation’s gross income from "interest (other
than original issue discount as defined in section 1273),
dividends, rents, salaries, wages, premiums, annuities,
compensations, remunerations, emoluments, and other fixed or
determinable annual or periodical gains, profits, and income",
but only to the extent the amount is received from sources within
the United States and is not effectively connected with the
conduct of trade or business by such corporation within the
United States. Sec. 881(a). A foreign corporation is not
subject to tax on its income which is not effectively connected
with its conduct of trade or business within the United States
and which is received from sources without the United States.
Id. In sum, if LTD is engaged in trade or business within the
United States, income items effectively connected with LTD's
trade or business, including items from sources without the
United States as described in section 864(c)(4), are taxed
pursuant to section 882(a)(1) at regular corporate rates; income
items not effectively connected with any trade or business
conducted by LTD within the United States, if sourced from within
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