Amended 1966, 1976, 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514 amended section generally, substituting provisions relating to income from sources within Guam, American Samoa, or the Northern Mariana Islands, for former provisions relating to income from sources within possessions of the United States, which had declared in: subsec. (a), general rule as to gross income, including requirements relating to 3-year period and trade or business; subsec. (b), rule as to amounts received in United States; subsec. (c), definition of “possession of the United States”; subsec. (d), general rule allowing deductions only to extent connected with income from sources within United States, and specific exceptions to limitations of general rule; subsec. (e), deduction for personal exemption; subsec. (f), allowance of deductions and credits; subsec. (g), foreign tax credit; subsec. (h), provisions relating to employees of United States.
- 1976 Pub. L. 94-455 Pub. L. 94–455, §§ 1051(c)(3), 1906(b)(13)(A), substituted “A citizen of the United States” for “Persons” after “Allowance of deductions and credits” and struck out in two places “or his delegate” after “Secretary”.
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1901(a)(117), redesignated subsec. (i) as (h). Former subsec. (h), relating to the status of a citizen of the United States who has been interned by the enemy, was struck out.
- 1966 Pub. L. 89-809 Subsec (d). Pub. L. 89–809 made applicable to United States citizens and domestic corporations engaged in trade or business in possessions, who qualify for the special tax treatment of income qualifying for the exclusion relating to income from United States possessions, provisions which allow deductions to nonresident aliens or foreign corporations engaged in trade or business in the United States by allowing deductions only where they are allocable to income effectively connected with the trade or business in the United States and by spelling out the exceptions allowing deductions whether or not connected with income from sources within the United States in the case of losses not connected with the trade or business but incurred in transactions entered into for profit, casualty losses, and charitable contributions.
Cases: Farrell v. United States, 313 F.3d 1214 (9th Cir. 2002)
Final rules 3
(a) General rule In the case of an individual who is a bona fide resident of a specified possession during the entire taxable year, gross income shall not include—
Amended 1971, 1976
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1051(c)(1), struck out all references to domestic corporations and made subsection applicable only to individual citizens.
- 1971 Pub. L. 92-178 Pub. L. 92–178 provided for non-application of section in the case of a corporation for a taxable year for which it is a DISC or in which it owns at any time stock in a DISC or former DISC.
Cited by 1
(1) income derived from sources within any specified possession, and
Cited by 2
(2) income effectively connected with the conduct of a trade or business by such individual within any specified possession.
Cited by 2
(b) Deductions, etc. allocable to excluded amounts not allowable An individual shall not be allowed—
(1) as a deduction from gross income any deductions (other than the deduction under section 151, relating to personal exemptions), or
(2) any credit,
properly allocable or chargeable against amounts excluded from gross income under this section.
(c) Specified possession For purposes of this section, the term “specified possession” means Guam, American Samoa, and the Northern Mariana Islands.
Amended 1972, 1976
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1051(c)(2), substituted “Commonwealth of Puerto Rico, the Virgin Islands of the United States, or Guam” for “Virgin Islands of the United States, and such term when used with respect to citizens of the United States does not include Puerto Rico or Guam” after “does not include the”.
- 1972 Pub. L. 92-606 Pub. L. 92–606 substituted “Puerto Rico or Guam” for “Puerto Rico”.
(d) Employees of the United States Amounts paid for services performed as an employee of the United States (or any agency thereof) shall be treated as not described in paragraph (1) or (2) of subsection (a).
Amended 1976, 1977, 1984, 2004
- 2004 Pub. L. 108-357 Pub. L. 108–357 amended heading and text of subsec. (d) generally, substituting provisions relating to employees of the United States for provisions consisting of pars. (1) to (3) relating to special rules concerning employees of the United States, determination of source of income, and determination of residency.
- 1984 Pub. L. 98-369 Pub. L. 98–369 substituted “for losses” for “, for losses of property not connected with the trade or business if arising from certain casualties or theft,”.
- 1977 Pub. L. 95-30 Pub. L. 95–30 struck out par. (3) which made a cross reference to section 142(b)(2) for disallowance of the standard deduction.
- 1976 Pub. L. 94-455 Pub. L. 94–455, §§ 1051(c)(3), 1906(b)(13)(A), substituted “a citizen of the United States” for “persons” after “in the case of” and struck out “or his delegate” after “Secretary”.