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Internal Revenue Code of 1986

The main body of federal tax law in the United States.

US Possessions

U.S. territories and commonwealths, specifically Guam, American Samoa, the Northern Mariana Islands, Puerto Rico, and the Virgin Islands.

Bona Fide Resident

An individual who meets specific physical presence and other criteria to be considered a true resident of a U.S. possession for tax purposes, often qualifying for special local tax benefits.

Source Rules

Tax regulations that determine where income is considered to have originated (e.g., from the U.S. or a U.S. possession), which impacts how that income is taxed.

Effectively Connected Income

Income earned by a foreign person or a U.S. possession resident that is directly linked to conducting a trade or business within the United States or a U.S. possession.

Preparatory or Auxiliary Activities

Support functions (like advertising, market research, or purchasing goods) that help a business operate but are not directly involved in generating its primary revenue.