Page:United States Statutes at Large Volume 100 Part 3.djvu/729

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PUBLIC LAW 99-000—MMMM. DD, 1986

PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2537

"(2) OTHER TRANSPORTATION HAVING UNITED STATES CONNECTION.—

"(A) IN GENERAL.—50 percent of all transportation income attributable to transportation which— "(i) is not described in paragraph (1), and "(ii) begins or ends in the United States, shall be treated as from sources in the United States.

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"(B)

SPECIAL RULE FOR PERSONAL SERVICE INCOME.—

Subparagraph (A) shall not apply to any transportation income which is income derived from personal services performed by the taxpayer, unless such income is attributable to transportation which— "(i) begins in the United States and ends in a possession of the United States, or "(ii) begins in a possession of the United States and ends in the United States." (b) 4 PERCENT TAX ON GROSS TRANSPORTATION INCOME.—

(1) IN GENERAL.—Part II of subchapter N of chapter 1 (relating to nonresident alien individuals and foreign corporations) is amended by redesignating subpart C as subpart D and by inserting after subpart B the following new subpart: "Subpart C—Tax on Gross Transportation Income "Sec. 887. Imposition of tax on gross transportation income of nonresident aliens and foreign corporations. "SEC. 887. IMPOSITION OF TAX ON GROSS TRANSPORTATION INCOME OF NONRESIDENT ALIENS AND FOREIGN CORPORATIONS.

"(a) IMPOSITION OF TAX.—In the case of any nonresident alien individual or foreign corporation, there is hereby imposed for each taxable year a tax equal to 4 percent of such individual's or corporation's United States source gross transportation income for such taxable year. "(b)

UNITED STATES SOURCE GROSS TRANSPORTATION INCOME.—

"(1) IN GENERAL.—Except as provided in paragraph (2), the term 'United States source gross transportation income' means any gross income which is transportation income (as defined in section 863(c)(3)) to the extent such income is treated as from sources in the United States under section 863(c). "(2) EXCEPTION FOR CERTAIN INCOME EFFECTIVELY CONNECTED WITH BUSINESS IN THE UNITED STATES.—The term 'United States

source gross transportation income' shall not include any income taxable under section 871(b) or 882. "(3) DETERMINATION OF EFFECTIVELY CONNECTED INCOME.—For

purposes of this chapter, transportation income of any taxpayer shall not be treated as effectively connected with the conduct of a trade or business in the United States unless— "(A) the taxpayer has a fixed place of business in the United States involved in the earning of transportation income, and "(B) substantially all of the United States source gross transportation income (determined without regard to paragraph (2)) of the taxpayer is attributable to regularly scheduled transportation (or, in the case of income from the leasing of a vessel or aircraft, is attributable to a fixed place of business in the United States).