1550
PUBLIC LAW 89-809-NOV. 13, 1966
[80 STAT.
68A Stat 7.
^2) Section 1 (relating to tax on individuals) is amended by redesignating subsection (d) as subsection (e), and by inserting after subsection (c) the following new subsection: " (d) NONRESIDENT A L I E N S. — I n the case of a nonresident alien individual, the tax imposed by subsection (a) shall apply only as provided Poi"t!p. "issf'*^' % section 871 or 877." (b) GROSS INCOME.—
75 Stat. 536.
(1) Subsection (a) of section 872 (relating to gross income of nonresident alien individuals) is amended to read as follows: " (a) GENERAL RULE. — I n the case of a nonresident alien individual, gross income includes only— "(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 "(2) gross income which is effectively connected with the conduct of a trade or business within the United States." (£) Subparagraph (B) of section 872(b)(3) (relating to compensation of participants in certain exchange or training programs) is amended by striking out "by a domestic corporation" and inserting in lieu thereof "by a domestic corporation, a domestic partnership, or an individual who is a citizen or resident of the United States". (3) Subsection (b) of section 872 (relating to exclusions from gross income) is amended by adding at the end thereof the following new paragraph: " (4) CERTAIN BOND INCOME OF RESIDENTS or THE RYUKYU ISLANDS OR THE TRUST TERRITORY OF THE PACIFIC ISLANDS.—
Income derived hj 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." (c) DEDUCTIONS.—
78 Stat. 43.
(1) Section 873 (relating to deductions allowed to nonresident alien individuals) is amended to read as follows: "SEC. 873. DEDUCTIONS. " (a) GENERAL RULE. — I n the case of a nonresident alien individual, the deductions shall be allowed only for purposes of section 871(b) and (except as provided by subsection (b)) only if and to theextent that they are connected with income which is effectively connected with the conduct of a trade or business within the United States; and the proper apportionment and allocation of the deductions for this purpose shall be determined as provided in regulations prescribed by the Secretary or his delegate. " (b) EXCEPTIONS.—The following deductions shall be allowed whether or not they are connected with income which is effectively connected with the conduct of a trade or business within the United States: "(1) Losses.—The deduction, for losses of property not connected with the trade or business if arising from certain casualties Or theft, allowed by section 165(c)(3), but only if the loss is of property located within the United States. " (2) CHARITABLE CONTRIBUTIONS.—The deduction for charita-
68A Stat. 58.
ble contributions and gifts allowed by section 170. " (3) PERSONAL
EXEMPTION.—The
deduction
for
personal
exemptions allowed by section 151, except that in the case of a nonresident alien individual who is not a resident of a contiguous country only one exemption shall be allowed under section 151.
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