The US IRS on December 11 published final regulations (TD 9921) on the source of income from sales of inventory produced in the US and sold outside the United States and vice versa.
The final regulations also contain new rules for determining the source of income from sales of personal property (including inventory) by nonresidents that are attributable to an office or other fixed place of business that the nonresident maintains in the US.
Further, the new regulations modify rules for determining whether foreign source income is effectively connected with the conduct of a trade or business within the United States.
The regulations were required to provide guidance on changes made to the US international tax rules in the Tax Cuts and Jobs Act, enacted in December 2017.
According to the Service, the final regulations retain the overall approach of proposed regulations (REG-100956-19), issued on December 30, 2019. Some changes were made in the final version, though, in response to comments.
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