- 27 - 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 orPage: Previous 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 Next
Last modified: May 25, 2011