Which of the following statements regarding the sourcing of gross income is true

Question

Which of the following statements regarding the sourcing of gross income is true?

a. All income earned by non-U.S. persons not engaged in a U.S. trade or business is treated as foreign source.

b. U.S.-source income is not subject to withholding so long as such income is not treated as effectively connected with a U.S. trade or business.

c. Certain U.S.-source investment income earned by non-U.S. persons not engaged in a U.S. trade or business may be subject to a U.S. withholding tax.

d. Non-U.S. persons not engaged in a U.S. trade or business are indifferent as to whether any of their income is U.S. source.

Explanation / Answer

Certain U.S.-source investment income earned by non-U.S. persons not engaged in a U.S. trade or business may be subject to a U.S. withholding tax. Option C is correct

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