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argument, and we conclude that application of effectively
connected income concepts leads to the same result as occurs by
applying the sourcing rules discussed above in paragraph C-5.
a. Sources Within
Section 864(c)(1)(A) determines whether income from sources
within the United States is effectively connected with a U.S.
trade or business. Under the effectively connected rules
applicable to income from sources within the United States,
income is effectively connected to the extent it has a U.S.
source. See sec. 864(c)(3). Thus, the effect of applying the
principles of section 864(c)(3) to section 931 would be that a
taxpayer’s income would qualify for the section 931 exclusion to
the extent the income is from an American Samoan source. That
analysis leads to the same result that we reached above at
paragraph C-5.
b. Sources Without
Section 864(c)(4) determines whether income from sources
without the United States is effectively connected with a U.S.
trade or business. The effect of applying the section 864(c)(4)
principles to construe section 931(a)(2) here is the same as
applying the sourcing rules (see par. C-5, above) for two
reasons. First, income from sources without the United States is
effectively connected with a U.S. trade or business of an
individual only if the income is earned through an office or
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