vom 4563

Department of the Treasury
Internal Revenue Service

Exclusion of Income from

Sources in United States Possessions
» Attach to Form 1040.

| 1074

Name as shown on Form 1040

Social security number

Gross Income for Applicable Periods

Gross Income During Periods Shown in Columns (3) and (4)

Periods in Whigh Income
Derived From Sou
Possessions of United States

Gross Income From Sources Within
Possessions of United States

Gross Income From

Year Name of Possession (Dates are inclusive) Sources Outside | Gross Income From
r United States and
Gras income rom nied tees and |” Sourey Wi
Fi T ay tonduct of a | Other gross income | United States *
om — trade or business
q) (2) @) (4) 6) (6) m @)
1972
1973)
1974
Totals... ee + $ $ $ $
Total of columns (5), (6), (7), and (8) $
Source of Gross Income from Salary, Wages, or Active Conduct of a Trade or Business (Column Gy, above)
Name and Address of Employer A
Year {if selfemployed, so. state) Nature of Business
1972
1973].
1974

INSTRUCTIONS (References are to the Internal Revenue Code)

A. Exclusion.—In general, _ foreign
source income actually or constructively
received outside the United States and
all types of income from sources in a
United States possession and not re-
ceived in the United States, including
earned income, investment income, and
capital gains, qualify for exemption from
United States tax under section 931. In:
come earned from services performed in
Non-U.S. Continental Shelf Areas may
qualify for exclusion under section 931
as income from a United States posses:
sion or other foreign source. (See section
638.)

B. Who is Entitled to Benefits of Sec-
tion 931.—A United States citizen is en-
titled to section 931 benefits if for the
3 years ending with the close of this tax-
able year he derived at least:

1. 80% of-his gross income (com-
puted without the benefit of this section)
from sources within a possession of the
United States, and

2. 50% of his gross income (com-
puted without the benefit of this section)
from the active conduct of a trade or busi-
ness within a United States possession
either on his own account or as an em-
ployee or an agent of another.

If you did not conduct a trade or busi-
ness or were not employed in a United
States 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

"Salary earned by you in a United States pos:
session and deposited by your employer to
your bank account in the United States is con:
sidered as received in the United States.

engaged in business or were employed in
the possession. The computation period
begins when you start your employment,
or when you become actively engaged in
your trade 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
19155.

D. The United States and Possessions
of the United States.—For purposes of
section 931, the term “United States’’
means only the 50 states and the District
of Columbia. Examples of possessions
are: Panama Canal Zone, American
Samoa, Wake, Johnston Island, and the
Midway Islands. For purposes of section
931, the term ‘‘possessions"’ does not in-
clude the Virgin Islands and such term
when used with respect to United States
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 United States possession
or other foreign source, you must never:
theless report the following on Form

1, All income you received from United
States sources,

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

3. Amounts you received for services
performed as an employee of the United
States or its agencies, regardless of
where performed.

F. Deductions.—If you are entitled to
the benefits of section 931, you may
claim deductions only to the extent they
are connected with income from sources
within the United States. Determine the
proper apportionment and allocation of
the deductions for income from sources
within and without the United States as
provided in the regulations.

Exceptions.—The following deductions
are allowed whether or not they are con-
nected with United States 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
resulting 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 United States.

4. Contributions and gifts to qualified
charitable organizations allowed by sec-
tion 170.

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

(a) Use the standard deduction or tax
tables.

(b) Claim exemptions for your spouse
or dependents.

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

(d) Claim a credit for income taxes
paid to a foreign country or United States
Possession.

sr U.S. GOVERNMENT PRINTING OFFICE :

1974—0-548-146 58-0401110

Form 4563 (1974)