# 26 U.S.C. § 872: Gross income Source: OLRC release point 119-134 . Cite pinpoints as 26 U.S.C. § 872(a)(1). ## § 872(a) General rule In the case of a nonresident alien individual, except where the context clearly indicates otherwise, gross income includes only— **§ 872(a)(1)** gross income which is derived from sources within the United States and which is not effectively connected with the conduct of a trade or business within the United States, and **§ 872(a)(2)** gross income which is effectively connected with the conduct of a trade or business within the United States. ## § 872(b) Exclusions The following items shall not be included in gross income of a nonresident alien individual, and shall be exempt from taxation under this subtitle: **§ 872(b)(1) Ships operated by certain nonresidents.** Gross income derived by an individual resident of a foreign country from the international operation of a ship or ships if such foreign country grants an equivalent exemption to individual residents of the United States. **§ 872(b)(2) Aircraft operated by certain nonresidents.** Gross income derived by an individual resident of a foreign country from the international operation of aircraft if such foreign country grants an equivalent exemption to individual residents of the United States. **§ 872(b)(3) Compensation of participants in certain exchange or training programs.** Compensation paid by a foreign employer to a nonresident alien individual for the period he is temporarily present in the United States as a nonimmigrant under subparagraph (F), (J), or (Q) of section 101(a)(15) of the Immigration and Nationality Act, as amended. For purposes of this paragraph, the term “foreign employer” means— **§ 872(b)(3)(A)** a nonresident alien individual, foreign partnership, or foreign corporation, or **§ 872(b)(3)(B)** an office or place of business maintained in a foreign country or in a possession of the United States by a domestic corporation, a domestic partnership, or an individual who is a citizen or resident of the United States. **§ 872(b)(4) Certain bond income of residents of the Ryukyu Islands or the Trust Territory of the Pacific Islands.** Income derived by a nonresident alien individual from a series E or series H United States savings bond, if such individual acquired such bond while a resident of the Ryukyu Islands or the Trust Territory of the Pacific Islands. **§ 872(b)(5) Income derived from wagering transactions in certain parimutuel pools.** Gross income derived by a nonresident alien individual from a legal wagering transaction initiated outside the United States in a parimutuel pool with respect to a live horse race or dog race in the United States. **§ 872(b)(6) Certain rental income.** Income to which paragraphs (1) and (2) apply shall include income which is derived from the rental on a full or bareboat basis of a ship or ships or aircraft, as the case may be. **§ 872(b)(7) Application to different types of transportation.** The Secretary may provide that this subsection be applied separately with respect to income from different types of transportation. **§ 872(b)(8) Treatment of possessions.** To the extent provided in regulations, a possession of the United States shall be treated as a foreign country for purposes of this subsection. ## Regulations - [Treas. Reg. § 1.872-1](/26/reg/1.872-1.md): Gross income of nonresident alien individuals. (interprets § 872) - [Treas. Reg. § 1.872-2](/26/reg/1.872-2.md): Exclusions from gross income of nonresident alien individuals. (interprets § 872) ## Leading cases - [Dillin v. Commissioner, 56 T.C. 228 (1971)](https://www.courtlistener.com/opinion/4703146/dillin-v-commissioner/) - [Stanford v. Commissioner, 297 F.2d 298 (9th Cir. 1961)](https://www.courtlistener.com/opinion/255762/julian-c-stanford-and-elizabeth-c-stanford-v-commissioner-of-internal/) - [Brittingham v. Commissioner, 66 T.C. 373 (1976)](https://www.courtlistener.com/opinion/4704257/brittingham-v-commissioner/) ## Connections Cites: none Cited by: § 877 Expatriation to avoid tax; § 883 Exclusions from gross income; § 7701 Definitions Derived from: 1939 § 211; 1939 § 212 ## Amendments - 1954-08-16: [Act Aug. 16, 1954, ch. 736](/26/act/1954-ch736.md), 68A Stat. 280 - 1961-09-21: [Pub. L. 87-256](/26/act/87-256.md), 75 Stat. 536 - 1966-11-13: [Pub. L. 89-809](/26/act/89-809.md), 80 Stat. 1550 - 1986-10-22: [Pub. L. 99-514](/26/act/99-514.md), 100 Stat. 2538 - 1988-11-10: [Pub. L. 100-647](/26/act/100-647.md), 102 Stat. 3500 - 1989-12-19: [Pub. L. 101-239](/26/act/101-239.md), 103 Stat. 2411 - 1994-08-15: [Pub. L. 103-296](/26/act/103-296.md), 108 Stat. 1535 - 2004-10-22: [Pub. L. 108-357](/26/act/108-357.md), 118 Stat. 1513