1552
PUBLIC LAW 89-809-NOV. 13, 1966
[80 STAT.
"(1) the gross income shall include only the gross income described in section 872(a) (as modified by subsection (c) of this section), and "(2) the deductions shall be allowed if and to the extent that they are connected with the gross income included under this section, except that the capital loss carryover provided by section ^^ s'^'^5 1212(b) shall not be allowed; and the proper allocation and apportionment of the deductions for this purpose shall be determined as provided under regulations prescribed by the Secretary or his delegate. For purposes of paragraph (2), the deductions allowed by section Ante, p. 1550 873(b) shall be allowed; and the deduction (for losses not connected with the trade or business if incurred in transactions entered into for 68A Stat. 49. profit) allowed by section 165(c)(2) shall be allowed, but only if the profit, if such transaction had resulted in a profit, would be included in gross income under this section. "(c) SPECIAL RULES OF SOURCE.—For purposes of subsection (b), the following items of gross income shall be treated as income from sources within the United States: "(1) SALE OF PROPERTY.—Gains on the sale or exchange of property (other than stock or debt obligations) located in the United States. " (2) STOCK OR DEBT OBLIGATIONS.—Gains on the sale or exchange of stock issued by a domestic corporation or debt obligations of United States persons or of the United States, a State or political subdivision thereof, or the District of Columbia. " (d) EXCEPTION FOR Loss OF CITIZENSHIP FOR CERTAIN CAUSES.— Subsection (a) shall not apply to a nonresident alien individual whose loss of United States citizenship resulted from the application of section 801(b), 350, or 355 of the Immigration and Nationality Act, as 66 Stat. 236. amended (8 U.S.C. 1401 (b), 1482, or 1487). " (e) BURDEN OF PROOF.—If the Secretary or his delegate establishes that it is reasonable to believe that an individual's loss of United States citizenship would, but for this section, result in a substantial reduction for the taxable year in the taxes on his probable income for such year, the burden of proving for such taxable year that such loss of citizenship did not have for one of its principal purposes the avoid26 USC 1-2524. fijxQ^ of taxes under this subtitle or subtitle B shall be on such individual." (2) The table of sections for subpart A of part II of subchapter N of chapter 1 is amended by striking out the item relating to section 877 and inserting in lieu thereof the following: "Sec. 877. Expatriation to avoid tax. "Sec. 878. Foreign educational, charitable, and certain. other exempt organizations." Ante, p. 1550.
(g) PARTIAL EXCIATSION OF DIVIDENDS.—Subsection (d) of section
116 (relating to certain nonresident aliens ineligible for exclusion) is amended to read as follows: "(d)
Ante, p. 1547.
Ante, p. 1551.
CERTAIN NONRESIDENT ALIENS INELIGIBLE FOR EXCLUSION.—In
the case of a nonresident alien individual, subsection (a) shall apply only— "(1) in determining the tax imposed for the taxable year pursuant to section 871(b)(1) and only in respect of dividends which are effectively connected with the conduct of a trade or business within the United States, or "(2) in determining the tax imposed for the taxable year pursuant to section 877(b)."
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