118 STAT. 1656 PUBLIC LAW 108–357—OCT. 22, 2004 of a trade or business within the United States shall not be treated as income from sources within any such possession or as effectively connected with the conduct of a trade or busi ness within any such possession. ‘‘(c) REPORTING REQUIREMENT.— ‘‘(1) IN GENERAL.—If, for any taxable year, an individual takes the position for United States income tax reporting pur poses that the individual became, or ceases to be, a bona fide resident of a possession specified in subsection (a)(1), such individual shall file with the Secretary, at such time and in such manner as the Secretary may prescribe, notice of such position. ‘‘(2) TRANSITION RULE.—If, for any of an individual’s 3 taxable years ending before the individual’s first taxable year ending after the date of the enactment of this subsection, the individual took a position described in paragraph (1), the indi vidual shall file with the Secretary, at such time and in such manner as the Secretary may prescribe, notice of such posi tion.’’. (b) PENALTY.—Section 6688 is amended— (1) by inserting ‘‘under section 937(c) or’’ before ‘‘by regula tions’’, and (2) by striking ‘‘$100’’ and inserting ‘‘$1,000’’. (c) CONFORMING AND CLERICAL AMENDMENTS.— (1) Section 931(d) is amended to read as follows: ‘‘(d) EMPLOYEES OF THE UNITED STATES.—Amounts paid for services performed as an employee of the United States (or any agency thereof) shall be treated as not described in paragraph (1) or (2) of subsection (a).’’. (2) Section 932 is amended by striking ‘‘at the close of the taxable year’’ and inserting ‘‘during the entire taxable year’’ each place it appears. (3) Section 934(b)(4) is amended by striking ‘‘the Virgin Islands or’’ each place it appears. (4) Section 935, as in effect before the effective date of its repeal, is amended— (A) by striking ‘‘for the taxable year who’’ in subsection (a) and inserting ‘‘who, during the entire taxable year’’, (B) by inserting ‘‘bona fide’’ before ‘‘resident’’ in sub section (a)(1), (C) in subsection (b)(1)— (i) by inserting ‘‘(other a bona fide resident of Guam during the entire taxable year)’’ after ‘‘United States’’ in subparagraph (A), and (ii) by inserting ‘‘bona fide’’ before ‘‘resident’’ in subparagraph (B), and (D) in subsection (b)(2) by striking ‘‘residence and’’. (5) Section 957(c) is amended— (A) in paragraph (2)(B) by striking ‘‘conduct of an active’’ and inserting ‘‘active conduct of a’’, and (B) in the last sentence by striking ‘‘derived from sources within a possession, was effectively connected with the conduct of a trade or business within a possession, or’’.
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