# § 862. Income from sources without the United States
**(a)** **Gross income from sources without United States** The following items of gross income shall be treated as income from sources without the United States:
**(1)** interest other than that derived from sources within the United States as provided in section 861(a)(1);
**(2)** dividends other than those derived from sources within the United States as provided in section 861(a)(2);
**(3)** compensation for labor or personal services performed without the United States;
**(4)** rentals or royalties from property located without the United States or from any interest in such property, including rentals or royalties for the use of or for the privilege of using without the United States patents, copyrights, secret processes and formulas, good will, trade-marks, trade brands, franchises, and other like properties;
**(5)** gains, profits, and income from the sale or exchange of real property located without the United States;
**(6)** gains, profits, and income derived from the purchase of inventory property (within the meaning of section 865(i)(1)) within the United States and its sale or exchange without the United States;
**(7)** underwriting income other than that derived from sources within the United States as provided in section 861(a)(7);
**(8)** gains, profits, and income from the disposition of a United States real property interest (as defined in section 897(c)) when the real property is located in the Virgin Islands; and
**(9)** amounts received, directly or indirectly, from a foreign person for the provision of a guarantee of indebtedness of such person other than amounts which are derived from sources within the United States as provided in section 861(a)(9).
**(b)** **Taxable income from sources without United States** From the items of gross income specified in subsection (a) there shall be deducted the expenses, losses, and other deductions properly apportioned or allocated thereto, and a ratable part of any expenses, losses, or other deductions which cannot definitely be allocated to some item or class of gross income. The remainder, if any, shall be treated in full as taxable income from sources without the United States. In the case of an individual who does not itemize deductions, an amount equal to the standard deduction shall be considered a deduction which cannot definitely be allocated to some item or class of gross income.
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**Source Credit**: (Aug. 16, 1954, ch. 736, 68A Stat. 276; Pub. L. 92–178, title III, § 314(b), Dec. 10, 1971, 85 Stat. 528; Pub. L. 94–455, title X, § 1036(b), title XIX, § 1901(b)(26)(C), Oct. 4, 1976, 90 Stat. 1633, 1798; Pub. L. 95–30, title I, § 102(b)(10), May 23, 1977, 91 Stat. 138; Pub. L. 97–34, title VIII, § 831(a)(2), Aug. 13, 1981, 95 Stat. 352; Pub. L. 99–514, title I, § 104(b)(12), title XII, § 1211(b)(1)(C), Oct. 22, 1986, 100 Stat. 2105, 2536; Pub. L. 100–647, title I, § 1012(e)(4), Nov. 10, 1988, 102 Stat. 3500; Pub. L. 101–239, title VII, § 7811(i)(2), Dec. 19, 1989, 103 Stat. 2409; Pub. L. 111–240, title II, § 2122(b), Sept. 27, 2010, 124 Stat. 2568.)
## Editorial Notes
### Amendments
2010—Subsec. (a)(9). added par. (9).
1989—Subsec. (a)(6). substituted “865(i)(1)” for “865(h)(1)”.
1988—Subsec. (c). repealed subsec. (c) which read as follows:
“(c) .—For source of amounts attributable to certain aircraft and vessels, see section 861(e).”
1986—Subsec. (a)(6). , substituted “inventory property (within the meaning of section 865(h)(1))” for “personal property”.
Subsec. (b). , substituted “the standard deduction” for “the zero bracket amount”.
1981—Subsec. (a)(8). added par. (8).
1977—Subsec. (b). provided that, in the case of an individual who does not itemize deductions, an amount equal to the zero bracket amount shall be considered a deduction which cannot definitely be allocated to some item or class of gross income.
1976—Subsec. (a)(5), (6). , inserted “or exchange” after “sale”.
Subsec. (a)(7). , added par. (7).
1971—Subsec. (c). added subsec. (c).
## Statutory Notes and Related Subsidiaries
### Effective Date of 2010 Amendment
Amendment by applicable to guarantees issued after , see , set out as a note under .
### Effective Date of 1989 Amendment
Amendment by effective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988, , to which such amendment relates, see , set out as a note under .
### Effective Date of 1988 Amendment
Amendment by effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, , to which such amendment relates, see , set out as a note under .
### Effective Date of 1986 Amendment
Amendment by applicable to taxable years beginning after , see , set out as a note under .
Amendment by applicable to taxable years beginning after , except as otherwise provided, see , set out as an Effective Date note under .
### Effective Date of 1981 Amendment
Amendment by applicable to dispositions after , in taxable years ending after such date, see , set out as a note under .
### Effective Date of 1977 Amendment
Amendment by applicable to taxable years beginning after , see , set out as a note under .
### Effective Date of 1976 Amendment
Amendment by applicable to taxable years beginning after , see , set out as a note under .
Amendment by effective for taxable years beginning after , see , set out as a note under .
### Effective Date of 1971 Amendment
Amendment by applicable to taxable years ending after , but only with respect to leases entered into after such date, see , set out as a note under .
### Applicability of Certain Amendments by Pub. L. 99–514 in Relation to Treaty Obligations of United States
For nonapplication of amendment by to the extent application of such amendment would be contrary to any treaty obligation of the United States in effect on , with provision that for such purposes any amendment by title I of be treated as if it had been included in the provision of to which such amendment relates, see section 1012(aa)(3), (4) of , set out as a note under .
### Qualified Research and Experimental Expenditures; Allocation and Apportionment; Definitions; Special Rules; Effective Dates
For allocation and apportionment of qualified research and experimental expenditures for purposes of sections 861 to 863 of this title, see , set out as a note under .
### 1-Year Modification in Regulations Providing for Allocation of Research and Experimental Expenditures
For rule governing allocation under subsec. (b) of this section of amounts allowable as a deduction for qualified research and experimental expenditures during taxable years beginning after , and on or before , see , set out as a note under .
### Allocation Under Section 861 of Research and Experimental Expenditures
For purposes of subsec. (b) of this section, all amounts allowable as a deduction for qualified research and experimental expenditures are to be allocated to income from sources within the United States and deducted from such income in determining the amount of taxable income from sources within the United States for taxable years beginning after , and on or before , see , set out as a note under .