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26 U.S.C. § 937 — Residence and source rules involving possessions
Federal law — U.S. Code and appendices · legal_authorities
**(a) Bona fide resident** For purposes of this subpart, section 865(g)(3), section 876, section 881(b), paragraphs (2) and (3) of section 901(b), section 957(c), section 3401(a)(8)(C), and section 7654(a), except as provided in regulations, the term “bona fide resident” means a person—
(1) who is present for at least 183 days during the taxable year in Guam, American Samoa, the Northern Mariana Islands, Puerto Rico, or the Virgin Islands, as the case may be, and
(2) who does not have a tax home (determined under the principles of section 911(d)(3) without regard to the second sentence thereof) outside such specified possession during the taxable year and does not have a closer connection (determined under the principles of section 7701(b)(3)(B)(ii)) to the United States or a foreign country than to such specified possession.
For purposes of paragraph (1), the determination as to whether a person is present for any day shall be made under the principles of section 7701(b).
**(b) Source rules** Except as provided in regulations, for purposes of this title—
(1) except as provided in paragraph (2), rules similar to the rules for determining whether income is income from sources within the United States or is effectively connected with the conduct of a trade or business within the United States shall apply for purposes of determining whether income is from sources within a possession specified in subsection (a)(1) or effectively connected with the conduct of a trade or business within any such possession, and
(2) any income treated as income from sources within the United States or as effectively connected with the conduct of a trade or business within the United States shall not be treated as income from sources within any such possession or as effectively connected w
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Source file: Laws/federal/codes/united-states-code/title-26/section-937-residence-and-source-rules-involving-possessions--0d23f95a6a.md
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Source location: Title 26, Chapter 1, § 937; chapter-001-normal-taxes-and-surtaxes.md
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**(a) Bona fide resident** For purposes of this subpart, section 865(g)(3), section 876, section 881(b), paragraphs (2) and (3) of section 901(b), section 957(c), section 3401(a)(8)(C), and section 7654(a), except as provided in regulations, the term “bona fide resident” means a person—
(1) who is present for at least 183 days during the taxable year in Guam, American Samoa, the Northern Mariana Islands, Puerto Rico, or the Virgin Islands, as the case may be, and
(2) who does not have a tax home (determined under the principles of section 911(d)(3) without regard to the second sentence thereof) outside such specified possession during the taxable year and does not have a closer connection (determined under the principles of section 7701(b)(3)(B)(ii)) to the United States or a foreign country than to such specified possession.
For purposes of paragraph (1), the determination as to whether a person is present for any day shall be made under the principles of section 7701(b).
**(b) Source rules** Except as provided in regulations, for purposes of this title—
(1) except as provided in paragraph (2), rules similar to the rules for determining whether income is income from sources within the United States or is effectively connected with the conduct of a trade or business within the United States shall apply for purposes of determining whether income is from sources within a possession specified in subsection (a)(1) or effectively connected with the conduct of a trade or business within any such possession, and
(2) any income treated as income from sources within the United States or as effectively connected with the conduct of a trade or business within the United States shall not be treated as income from sources within any such possession or as effectively connected with the conduct of a trade or business within any such possession.
**(c) Reporting requirement**
(1) **In general** — If, for any taxable year, an individual takes the position for United States income tax reporting purposes that the individual became, or ceases to be, a bona fide resident of a possession specified in subsection (a)(1), such individual shall file with the Secretary, at such time and in such manner as the Secretary may prescribe, notice of such position.
(2) **Transition rule** — If, for any of an individual’s 3 taxable years ending before the individual’s first taxable year ending after the date of the enactment of this subsection, the individual took a position described in paragraph (1), the individual shall file with the Secretary, at such time and in such manner as the Secretary may prescribe, notice of such position.
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Federal law — U.S. Code and appendices · legal_authorities
In addition to any criminal penalty provided by law, any person described in section 7654(a) who is required under section 937(c) or by regulations prescribed under section 7654 to furnish information and who fails to comply with such requirement at the time prescribed by such regulations unless it is shown that such failure is due to reasonable cause and not to willful neglect, shall pay (upon notice and demand by the Secretary and in the same manner as tax) a penalty of $1,000 for each such failure.
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Federal law — U.S. Code and appendices · legal_authorities
**(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—
(1) income derived from sources within any specified possession, and
(2) income effectively connected with the conduct of a trade or business by such individual within any specified possession.
**(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.
**(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).
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Treatment of United States residents**
(1) **Application of subsection** — This subsection shall apply to an individual for the taxable year if—
(A) such individual—
(i) is a citizen or resident of the United States (other than a bona fide resident of the Virgin Islands during the entire taxable year), and
(ii) has income derived from sources within the Virgin Islands, or effectively connected with the conduct of a trade or business within such possession, for the taxable year, or
(B) such individual files a joint return for the taxable year with an individual described in subparagraph (A).
(2) **Filing requirement** — Each individual to whom this subsection applies for the taxable year shall file his income tax return for the taxable year with both the United States and the Virgin Islands.
(3) **Extent of income tax liability** — In the case of an individual to whom this subsection applies in a taxable year for purposes of so much of this title (other than this section and section 7654) as relates to the taxes imposed by this chapter, the United States shall be treated as including the Virgin Islands.
**(b) Portion of United States tax liability payable to the Virgin Islands**
(1) **In general** — Each individual to whom subsection (a) applies for the taxable year shall pay the applicable percentage of the taxes imposed by this chapter for such taxable year (determined without regard to paragraph (3)) to the Virgin Islands.
(2) **Applicable percentage**
(A) *In general* — For purposes of paragraph (1), the term “applicable percentage” means the percentage which Virgin Islands adjusted gross income bears to adjusted gross income.
(B) *Virgin Islands adjusted gross income* — For purposes of subparagraph (A), the term “Virgin Islands adju
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 932
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** Tax liability incurred to the Virgin Islands pursuant to this subtitle, as made applicable in the Virgin Islands by the Act entitled “An Act making appropriations for the naval service for the fiscal year ending June 30, 1922, and for other purposes”, approved July 12, 1921 ([48 U.S.C. 1397](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title48-section1397&num=0&edition=prelim)), or pursuant to section 28(a) of the Revised Organic Act of the Virgin Islands, approved July 22, 1954 ([48 U.S.C. 1642](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title48-section1642&num=0&edition=prelim)), shall not be reduced or remitted in any way, directly or indirectly, whether by grant, subsidy, or other similar payment, by any law enacted in the Virgin Islands, except to the extent provided in subsection (b).
**(b) Reductions permitted with respect to certain income**
(1) **In general** — Except as provided in paragraph (2), subsection (a) shall not apply with respect to so much of the tax liability referred to in subsection (a) as is attributable to income derived from sources within the Virgin Islands or income effectively connected with the conduct of a trade or business within the Virgin Islands.
(2) **Exception for liability paid by citizens or residents of the United States** — Paragraph (1) shall not apply to any liability payable to the Virgin Islands under section 932(b).
(3) **Special rule for non-United States income of certain foreign corporations**
(A) *In general* — In the case of a qualified foreign corporation, subsection (a) shall not apply with respect to so much of the tax liability referred to in subsection (a) as is attributable to income which is derived from sources outside the United States and which is
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** For purposes of this title, the term “controlled foreign corporation” means any foreign corporation if more than 50 percent of—
(1) the total combined voting power of all classes of stock of such corporation entitled to vote, or
(2) the total value of the stock of such corporation,
is owned (within the meaning of section 958(a)), or is considered as owned by applying the rules of ownership of section 958(b), by United States shareholders on any day during the taxable year of such foreign corporation.
**(b) Special rule for insurance** For purposes only of taking into account income described in section 953(a) (relating to insurance income), the term “controlled foreign corporation” includes not only a foreign corporation as defined by subsection (a) but also one of which more than 25 percent of the total combined voting power of all classes of stock (or more than 25 percent of the total value of stock) is owned (within the meaning of section 958(a)), or is considered as owned by applying the rules of ownership of section 958(b), by United States shareholders on any day during the taxable year of such corporation, if the gross amount of premiums or other consideration in respect of the reinsurance or the issuing of insurance or annuity contracts not described in section 953(e)(2) exceeds 75 percent of the gross amount of all premiums or other consideration in respect of all risks.
**(c) United States person** For purposes of this subpart, the term “United States person” has the meaning assigned to it by section 7701(a)(30) except that—
(1) with respect to a corporation organized under the laws of the Commonwealth of Puerto Rico, such term does not include an individual who is a bona fide resident of Puerto Rico, if a dividend received by such in
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Federal law — U.S. Code and appendices · legal_authorities
Page 2167
TITLE 26—INTERNAL REVENUE CODE
§ 937
(a) [enacting this section] shall apply to tax liability
incurred with respect to taxable years beginning on or
after January 1, 1960.’’
PLAN AMENDMENTS NOT REQUIRED UNTIL
JANUARY 1, 1989
For provisions directing that if any amendments
made by subtitle A or subtitle C of title XI [§§ 1101–1147
and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L.
99–514 require an amendment to any plan, such plan
amendment shall not be required to be made before the
first plan year beginning on or after Jan. 1, 1989, see
section 1140 of Pub. L. 99–514, as amended, set out as a
note under section 401 of this title.
[§ 934A. Repealed. Pub. L. 99–514, title XII,
§ 1275(c)(3), Oct. 22, 1986, 100 Stat. 2599]
Section, added Pub. L. 97–455, § 1(a), Jan. 12, 1983, 96
Stat. 2497, related to income tax rate on Virgin Islands
source income.
Statutory Notes and Related Subsidiaries
EFFECTIVE DATE OF REPEAL
Repeal applicable to taxable years beginning after
Dec. 31, 1986, with certain exceptions and qualifica-
tions, see section 1277 of Pub. L. 99–514, set out as an Ef-
fective Date of 1986 Amendment note under section 931
of this title.
[§ 935.
Repealed.
Pub.
L.
99–514,
title
XII,
§ 1272(d)(2), Oct. 22, 1986, 100 Stat. 2594]
Section, added Pub. L. 92–606, § 1(a), Oct. 31, 1972, 86
Stat. 1494; amended Pub. L. 108–357, title VIII,
§ 908(c)(4), Oct. 22, 2004, 118 Stat. 1656, related to coordi-
nation of United States and Guam individual income
taxes.
Statutory Notes and Related Subsidiaries
AMENDMENT SUBSEQUENT TO REPEAL
Pub. L. 108–357, title IX, § 908(c)(4), (d), Oct. 22, 2004,
118 Stat. 1656, 1657, applicable to taxable years ending
after Oct. 22, 2004, amended section, as in effect before
the effective date of it
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