rm 4563

Department of the Treasury
Internal Revenue Service

Exclusion of Income from

Sources in United States Possessions

> Attach to Form 1040.

1976

Name(s) as shown on Form 1040

Your social security number

Gross Income for Applicable Periods (See Instruction E for income to be reported.)

Year Name of Possession

Periods in Which Income Was

Gross Income During Periods Shown in Columns (c) and (4)

Derived From Sources Within
Possessions of United States
(Dates are inclusive)

Gross income from

Gross Income From Sources Within
Possessions of United States

Gross Income From
‘Sources Outside

Gross Income From
United States and

Sources Within

alan, wages, or | Other gross income | Pestossions of United States
From— To— | “trade or business “nited States

(@) (b) () (ay 12] @ (@) )

1974|, $ $ $ $

1975]

1976)

lTotas 2... . ee ee . woe $ $ $ $

2 Total gross income for applicable periods. Add line 1 (columns (e), (f), (g), and(h)) . . . . . . . . | $

Source of Gross Income from Salary, Wages, or Active Conduct of a Trade or Business (Column (e), above)

Name and Address of Employer ;
Year (If self-employed, so state) Nature of Business
1974
1975
1976
Instructions you become actively engaged in yourtrade deductions only to the extent they are

(References are to the Internal Revenue
Code)

A. Exclusion.—In general, foreign source
income actually or constructively received
outside the U.S. and all types of income
from sources in a U.S. possession and not
received in the U.S., including earned in-
come, investment income, and capital
gains, qualify for exemption from U.S. tax
under section 931. Income earned from
services performed in Non-U.S. Continental
Shelf Areas may qualify for exclusion under
section 931 as income from a U.S. posses-
sion or other foreign source. (See section

B. Who is Entitled to Benefits of Section
931.—A U.S. citizen is entitled to section
931 benefits if for the 3 years ending with
the close of this taxable year (or for such
part of such period immediately preced-
ing the close of such taxable year as may
be applicable) you derived at least:

1. 80% of your gross income (computed
without the benefit of this section) from
sources within a possession of the U.S.,
an

2. 50% of your gross income (com-
puted without the benefit of this section)
from the active conduct of a trade or busi-
ness within a U.S. possession either on
your own account or as an employee or an
agent of another.

If you did not conduct a trade or busi-
ness or were not employed in a U.S.
possession for the entire 3 years, you are
required, for benefits of section 931, to
meet the test only for that part of the
3-year period during which you were en-
gaged in business or were employed in the
possession. The computation period begins
when you start your employment, or when

or business.

C. Where to File.—Attach Form 4563 to
your Form 1040 and file with_Internal
Revenue Service Center, 11601 Roosevelt
Boulevard, Philadelphia, Pennsylvania

D. The U.S. and Possessions of the
U.S.—For purposes of section 931, the
term “ ”" means only the 50 states and
the District of Columbia.

For purposes of section 931, the term
“possession of the U.S.” includes the Pan-
ama Canal Zone, American Samoa, Wake
Island, and Midway Island. For purposes of
section 931, the term “possession” does
not include the Virgin Islands and such term
when used with respect to U.S. citizens
does not include Puerto Rico and Guam.

E. Income to be Reported.—If you meet
the requirements of paragraph B, and are
therefore permitted to exclude income
from a U.S. possession or other foreign
source, you must nevertheless report the
following on Form 1040:

1. All income you received from U.S.
sources,

2. All amounts you or your agent re-
ceived in the U.S. with respect to income
from possessions or other foreign sources,

3. Amounts you received for services
performed as an employee of the U.S.
or its agencies, regardless of where
performed, and

4. All income you received during the
portion of the taxable year that is not part
of the applicable period shown above. The
source of that income or the place where it
was received are not relevant. It does not
qualify for the possession exemption.

F. Deductions.—If you are entitled to
the benefits of section 931, you may claim

connected with income from sources within
the U.S. Determine the proper apportion-
ment and allocation of the deductions for
income from sources within and without
the U.S. as provided in the regulations.

Exceptions.—The following deductions
are allowed whether or not they are con-
nected with U.S. source income:

1. One personal exemption of $750.

2. Losses allowed by section 165(c)(2)
that are not connected with a trade or
business, if those losses stemmed from
transactions for profit, but only if any re-
sulting profit would have been taxable.

3. Losses allowed by section 165(c)(3)
of property not connected with a trade or
business if arising from certain casualties
or theft, but only if the loss is of property
within the U.S.

4, Contributions and gifts to qualified
charitable organizations allowed by section

If you claim the benefits of section 931,
you are not allowed to:

(a) Use the standard deduction.

(b) Claim exemptions for your spouse
or dependents.

(c) Use the income averaging provi-
sions of sections 1301, 1302, 1303,
1304, and 1305.

(d) Claim a credit for income taxes
paid to a foreign country or U:!
possession.

(e) Claim the earned income credit.

For more information on U.S. posses-
sions income obtain Publication 570, Tax
Guide for U.S. Citizens Employed in U.S.
Possessions, from any Internal Revenue
Service office.

e43—218-151-1

U.S. GOVERNMENT PRINTING OFFICE 049—218~151

Form 4563 (1976)