Sourcing Rules for International Taxation of US and Foreign Persons

Author: Robert J. Misey

Per the IRS Education Provider Standards this course must be COMPLETED by 12/31/2027 to receive credits. NOTE: Go to My Professional Profile in your CCH CPELink account settings to ensure your name, and PTIN number; matches your PTIN card

The sourcing rules are the building blocks of the U.S. rules of international taxation. These rules are particularly important to foreign persons, who only pay tax on their U.S.-source income. They are also important to U.S. persons, who will want as much income as possible characterized as foreign-source to increase their foreign tax credit limitation. As a corollary, expenses must be allocated and apportioned between U.S.-source income and foreign-source income.

Publication Date: September 2024

Topics Covered

• How sourcing impacts the tax paid by foreign persons
• How sourcing impacts the foreign tax credits of U.S. persons
• The sourcing of passive income — interest, dividends, rents, and royalties
• The sourcing of income on sales of real estate and personal property
• The special rules for sourcing income on sales of inventory
• The allocation and apportionment of expenses
• The sourcing of compensation for services

Learning Objectives

• Describe the U.S. rules of sourcing of income
• Describe the U.S. rules of allocating and apportioning expenses
• Identify what percent the gain on sale by a U.S. resident abroad must incur of foreign tax to be foreign-sourced income
• Identify the type of payment that is excluded from personal services income
• Identify what the de minimis rule is also referred to as

Level
Basic

Instructional Method
Self-Study

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
None

Advance Preparation
None