26 U.S.C. § 874 — Allowance of deductions and credits

Page 2068 TITLE 26—INTERNAL REVENUE CODE § 874 1550; Pub. L. 92–580, § 1(b), Oct. 27, 1972, 86 Stat. 1276; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 95–30, title I, § 101(d)(11), May 23, 1977, 91 Stat. 134; Pub. L. 98–369, div. A, title VII, § 711(c)(2)(A)(iv), July 18, 1984, 98 Stat. 945; Pub. L. 105–277, div. J, title IV, § 4004(b)(3), Oct. 21, 1998, 112 Stat. 2681–911.) Editorial Notes AMENDMENTS 1998—Subsec. (b)(1). Pub. L. 105–277 amended heading and text of par. (1) generally. Prior to amendment, text read as follows: ‘‘The deduction for losses allowed by section 165(c)(3), but only if the loss is of property lo- cated within the United States.’’ 1984—Subsec. (b)(1). 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—Subsec. (c). Pub. L. 95–30 struck out par. (1) which made a cross reference to section 142(b)(1) for disallowance of the standard deduction and struck out ‘‘(2)’’ at beginning of single remaining cross reference. 1976—Subsec. (a). Pub. L. 94–455 struck out ‘‘or his delegate’’ after ‘‘Secretary’’. 1972—Subsec. (b)(3). Pub. L. 92–580 substituted excep- tion that only one exemption be allowed under section 151 unless the taxpayer is a resident of a contiguous country or is a national of the United States, for excep- tion that in the case of a non-resident alien individual who is not a resident of a contiguous country only one exception be allowed under section 151. 1966—Pub. L. 89–809 amended section generally, sub- stituting ‘‘connected with income which is effectively connected with the conduct of a trade or business with- in the United States’’ for ‘‘connected with income from sources within the United States’’ in subsec. (a), strik- ing out provisions relating to the deduction of losses not connected with a trade or business but incurred in transactions entered into for profit in subsec. (b), mak- ing the casualty loss deduction available even if the property giving rise to the loss is not effectively con- nected with the conduct of a trade or business in the United States if the property is located in this country, making the charitable contribution deduction available even though not related to the trade or business, and adding subsec. (c)(2) making a cross reference to sec- tion 906(b)(1) for rule that certain foreign taxes are not to be taken into account in determining deduction or credit. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1998 AMENDMENT Amendment by Pub. L. 105–277 applicable to taxable years beginning after Dec. 31, 1983, see section 4004(c)(1) of Pub. L. 105–277, set out as a note under section 172 of this title. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–369 applicable to taxable years beginning after Dec. 31, 1983, see section 711(c)(2)(A)(v) of Pub. L. 98–369, set out as a note under section 165 of this title. EFFECTIVE DATE OF 1977 AMENDMENT Amendment by Pub. L. 95–30 applicable to taxable years beginning after Dec. 31, 1976, see section 106(a) of Pub. L. 95–30, set out as a note under section 1 of this title. EFFECTIVE DATE OF 1972 AMENDMENT Amendment by Pub. L. 92–580 applicable to taxable years beginning after Dec. 31, 1971, see section 1(c) of Pub. L. 92–580, set out as a note under section 152 of this title. EFFECTIVE DATE OF 1966 AMENDMENT Amendment by Pub. L. 89–809 applicable with respect to taxable years beginning after Dec. 31, 1966, see sec- tion 103(n)(1) of Pub. L. 89–809, set out as a note under section 871 of this title. § 874. Allowance of deductions and credits (a) Return prerequisite to allowance A nonresident alien individual shall receive the benefit of the deductions and credits allowed to him in this subtitle only by filing or causing to be filed with the Secretary a true and accu- rate return, in the manner prescribed in subtitle F (sec. 6001 and following, relating to procedure and administration), including therein all the information which the Secretary may deem nec- essary for the calculation of such deductions and credits. This subsection shall not be con- strued to deny the credits provided by sections 31 and 33 for tax withheld at source or the credit provided by section 34 for certain uses of gaso- line and special fuels. (b) Tax withheld at source The benefit of the deduction for exemptions under section 151 may, in the discretion of the Secretary, and under regulations prescribed by the Secretary, be received by a non-resident alien individual entitled thereto, by filing a claim therefor with the withholding agent. (c) Foreign tax credit Except as provided in section 906, a non- resident alien individual shall not be allowed the credits against the tax for taxes of foreign countries and possessions of the United States allowed by section 901. (Aug. 16, 1954, ch. 736, 68A Stat. 281; Pub. L. 89–44, title VIII, § 809(d)(3), June 21, 1965, 79 Stat. 167; Pub. L. 89–809, title I, §§ 103(d), 106(a)(3), Nov. 13, 1966, 80 Stat. 1551, 1569; Pub. L. 91–258, title II, § 207(d)(1), May 21, 1970, 84 Stat. 248; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 97–424, title V, § 515(b)(6)(E), Jan. 6, 1983, 96 Stat. 2182; Pub. L. 98–369, div. A, title IV, § 474(r)(19), July 18, 1984, 98 Stat. 843.) Editorial Notes AMENDMENTS 1984—Subsec. (a). Pub. L. 98–369 substituted reference to section ‘‘33’’ for ‘‘32’’ and ‘‘34’’ for ‘‘39’’. 1983—Subsec. (a). Pub. L. 97–424 substituted ‘‘and spe- cial fuels’’ for ‘‘, special fuels, and lubricating oil’’. 1976—Subsecs. (a), (b). Pub. L. 94–455 struck out ‘‘or his delegate’’ after ‘‘Secretary’’. 1970—Subsec. (a). Pub. L. 91–258 included provision against construction of subsec. (a) to deny credit pro- vided by section 39 for certain uses of special fuels. 1966—Subsec. (a). Pub. L. 89–809, § 103(d), struck out ‘‘of his total income received from all sources in the United States’’ after ‘‘true and accurate return’’. Subsec. (c). Pub. L. 89–809, § 106(a)(3), substituted ‘‘Foreign tax credit’’ for ‘‘Foreign tax credit not al- lowed’’ in heading and inserted reference to an excep- tion provided in section 906. 1965—Subsec. (a). Pub. L. 89–44 inserted ‘‘or the credit provided by section 39 for certain uses of gasoline and lubricating oil’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–369 applicable to taxable years beginning after Dec. 31, 1983, and to carrybacks Page 2069 TITLE 26—INTERNAL REVENUE CODE § 877 from such years, see section 475(a) of Pub. L. 98–369, set out as a note under section 21 of this title. EFFECTIVE DATE OF 1983 AMENDMENT Amendment by Pub. L. 97–424 applicable with respect to articles sold after Jan. 6, 1983, see section 515(c) of Pub. L. 97–424, set out as a note under section 34 of this title. EFFECTIVE DATE OF 1970 AMENDMENT Amendment by Pub. L. 91–258 effective July 1, 1970, see section 211(a) of Pub. L. 91–258, set out as a note under section 4041 of this title. EFFECTIVE DATE OF 1966 AMENDMENT Amendment by section 103(d) of Pub. L. 89–809 appli- cable with respect to taxable years beginning after Dec. 31, 1966, see section 103(n)(1) of Pub. L. 89–809, set out as a note under section 871 of this title. Pub. L. 89–809, title I, § 106(a)(6), Nov. 13, 1966, 80 Stat. 1569, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘The amendments made by this subsection [enacting section 906 of this title and amending this section and section 901 of this title] shall apply with respect to taxable years beginning after Dec. 31, 1966. In applying section 904 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] with respect to section 906 of such Code, no amount may be carried from or to any taxable year beginning before Jan. 1, 1967, and no such year shall be taken into account.’’ EFFECTIVE DATE OF 1965 AMENDMENT Amendment by Pub. L. 89–44 applicable to taxable years beginning on or after July 1, 1965, see section 809(f) of Pub. L. 89–44, set out as a note under section 6420 of this title. § 875. Partnerships; beneficiaries of estates and trusts For purposes of this subtitle— (1) a nonresident alien individual or foreign corporation shall be considered as being en- gaged in a trade or business within the United States if the partnership of which such indi- vidual or corporation is a member is so en- gaged, and (2) a nonresident alien individual or foreign corporation which is a beneficiary of an estate or trust which is engaged in any trade or busi- ness within the United States shall be treated as being engaged in such trade or business within the United States. (Aug. 16, 1954, ch. 736, 68A Stat. 281; Pub. L. 89–809, title I, § 103(e)(1), Nov. 13, 1966, 80 Stat. 1551.) Editorial Notes AMENDMENTS 1966—Pub. L. 89–809 designated existing provisions as par. (1), substituted reference to nonresident alien indi- viduals or foreign corporations for reference simply to nonresident alien individuals, and added par. (2). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1966 AMENDMENT Amendment by Pub. L. 89–809 applicable with respect to taxable years beginning after Dec. 31, 1966, see sec- tion 103(n)(1) of Pub. L. 89–809, set out as a note under section 871 of this title. § 876. Alien residents of Puerto Rico, Guam, American Samoa, or the Northern Mariana Islands (a) General rule This subpart shall not apply to any alien indi- vidual who is a bona fide resident of Puerto Rico, Guam, American Samoa, or the Northern Mariana Islands during the entire taxable year and such alien shall be subject to the tax im- posed by section 1. (b) Cross references For exclusion from gross income of income de- rived from sources within— (1) Guam, American Samoa, and the Northern Mariana Islands, see section 931, and (2) Puerto Rico, see section 933. (Aug. 16, 1954, ch. 736, 68A Stat. 281; Pub. L. 99–514, title XII, § 1272(b), Oct. 22, 1986, 100 Stat. 2593.) Editorial Notes AMENDMENTS 1986—Pub. L. 99–514, § 1272(b), inserted ‘‘, Guam, American Samoa, or the Northern Mariana Islands’’ in section catchline. Subsec. (a). Pub. L. 99–514, § 1272(b), amended subsec. (a) generally, substituting ‘‘General rule’’ for ‘‘No ap- plication to certain alien residents of Puerto Rico’’ in heading and inserting references to residents of Guam, American Samoa, and the Northern Mariana Islands in text. Subsec. (b). Pub. L. 99–514, § 1272(b), amended subsec. (b) generally, inserting references to Guam, American Samoa, and the Northern Mariana Islands. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1986 AMENDMENT Amendment by Pub. L. 99–514 applicable to taxable years beginning after Dec. 31, 1986, with certain excep- tions and qualifications, see section 1277 of Pub. L. 99–514, set out as a note under section 931 of this title. § 877. Expatriation to avoid tax (a) Treatment of expatriates (1) In general Every nonresident alien individual to whom this section applies and who, within the 10- year period immediately preceding the close of the taxable year, lost United States citizen- ship shall be taxable for such taxable year in the manner provided in subsection (b) if the tax imposed pursuant to such subsection (after any reduction in such tax under the last sen- tence of such subsection) exceeds the tax which, without regard to this section, is im- posed pursuant to section 871. (2) Individuals subject to this section This section shall apply to any individual if— (A) the average annual net income tax (as defined in section 38(c)(1)) of such individual for the period of 5 taxable years ending be- fore the date of the loss of United States citizenship is greater than $124,000, (B) the net worth of the individual as of such date is $2,000,000 or more, or (C) such individual fails to certify under penalty of perjury that he has met the re-