Income From Sources Outside the United States

Foreign source income generally includes, but isn’t limited to, the following.

• Gain on the sale of nondepreciable personal property you sold while maintaining a tax home outside the United States, if you paid a tax of at least 10% of the gain to a foreign country.

Foreign source income generally doesn’t include gain realized on the sale or exchange of personal property by a U.S. resident, as defined in section 865(g).

Special rules apply in determining the source of income from the sale of inventory; sale of depreciable property used in a trade or business; sale of intangible property such as a patent, copyright, or trademark; and transportation services that begin or end in the United States or a U.S. territory. See Pub. 514 for more information.

Compensation for labor or personal services as an em- ployee. If you are an employee and receive compensation for labor or personal services performed both inside and outside the United States, special rules apply in determining the source of the compensation. Compensation (other than fringe benefits) is sourced on a time basis. Fringe benefits (such as housing and education) are sourced on a geographical basis. Or you may be able to use an alternative basis to determine the source. If you use an alternative basis, you may have to check the box on line 1b (discussed later). See Pub. 514 for more information.