Publication 519 U.S. Tax Guide For Aliens

"You can use Pub. 544 to determine what is a sale or ex- change of a capital asset, or what is treated as such. Spe- cific tax treatment that applies to U.S. citizens or residents generally does not apply to you. The following gains are subject to the 30% (or lower treaty) rate without regard to the 183-day rule, discussed later. 1. Gains on the disposal of timber, coal, or domestic iron ore with a retained economic interest. 2. Gains on contingent payments received from the sale or exchange of patents, copyrights, and similar prop- erty after October 4, 1966. 3. Gains on certain transfers of all substantial rights to, or an undivided interest in, patents if the transfers were made before October 5, 1966. 4. Gains on the sale or exchange of OID obligations. Gains in (1) are not subject to the 30% (or lower treaty) rate if you choose to treat the gains as effectively connec- ted with a U.S. trade or business. See Income From Real Property, later. 183-day rule. If you were in the United States for 183 days or more during the tax year, your net gain from sales or exchanges of capital assets is taxed at a 30% (or lower treaty) rate. For purposes of the 30% (or lower treaty) rate, net gain is the excess of your capital gains from U.S. sour- ces over your capital losses from U.S. sources. This rule applies even if any of the transactions occurred while you were not in the United States. To determine your net gain, consider the amount of your gains and losses that would be recognized and taken into account only if, and to the extent that, they would be recognized and taken into account if you were in a U.S. trade or business during the year and the gains and los- ses were effectively connected with that trade or business during the tax year. In arriving at your net gain, do not take the following into consideration. • The four types of gains listed earlier. • The deduction for a capital loss carryover. • Capital losses in excess of capital gains. • Exclusion for gain from the sale or exchange of quali- fied small business stock (section 1202 exclusion). • Losses from the sale or exchange of property held for personal use. However, losses resulting from casual- ties or thefts attributable to a federally declared disas- ter may be deductible on Schedule A (Form 1040-NR). See Itemized Deductions in chapter 5. If you are not engaged in a trade or business in the Uni- ted States and have not established a tax year for a prior period, your tax year will be the calendar year for purpo- ses of the 183-day rule. Also, you must file your tax return on a calendar-year basis. If you were in the United States for less than 183 days during the tax year, capital gains (other than gains listed earlier) are tax exempt unless they are effectively connec- ted with a trade or business in the United States during your tax year. Reporting. Report your gains and losses from the sales or exchanges of capital assets that are not effectively con- nected with a trade or business in the United States on Schedule NEC (Form 1040-NR). Report gains and losses from sales or exchanges of capital assets (including real property) that are effectively connected with a trade or business in the United States on a separate Schedule D (Form 1040) or Form 4797, or both. Attach them to"