118 STAT. 1655 PUBLIC LAW 108–357—OCT. 22, 2004 employee for purposes of chapter 24 (relating to with holding of income tax at source on wages). ‘‘(B) SPECIFIED INDIVIDUALS.— ‘‘(i) IN GENERAL.—In the case of a recipient who is a specified individual, subparagraph (A) and para graph (9) shall each be applied by substituting ‘to the extent that the expenses do not exceed the amount of the expenses which’ for ‘to the extent that the expenses’. ‘‘(ii) SPECIFIED INDIVIDUAL.—For purposes of clause (i), the term ‘specified individual’ means any individual who— ‘‘(I) is subject to the requirements of section 16(a) of the Securities Exchange Act of 1934 with respect to the taxpayer, or ‘‘(II) would be subject to such requirements if the taxpayer were an issuer of equity securities referred to in such section.’’. (b) EFFECTIVE DATE.—The amendment made by this section shall apply to expenses incurred after the date of the enactment of this Act. SEC. 908. RESIDENCE AND SOURCE RULES RELATING TO UNITED STATES POSSESSIONS. (a) RESIDENCE AND SOURCE RULES.—Subpart D of part III of subchapter N of chapter 1 (relating to possessions of the United States) is amended by adding at the end the following new section: ‘‘SEC. 937. RESIDENCE AND SOURCE RULES INVOLVING POSSESSIONS. ‘‘(a) BONA FIDE RESIDENT.—For purposes of this subpart, sec tion 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 Applicability. 26 USC 274 note. Applicability.
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