Page:United States Statutes at Large Volume 100 Part 3.djvu/785

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2593

(3) SPECIAL RULE FOR NORTHERN MARIANA ISLANDS.—Notwith-

s t and i n g the provisions of the last clause of section 601(a) of Public Law 94-241, the Commonwealth of the Northern Maria n a Islands may elect to continue its m i r r o r system of taxation without regard to w h e the r G u a m enacts tax laws under the authority provided in subsection (a). SKC. 1272. KXCLISION OF POSSESSION SOURCE INCOME FROM THE C.ROSS INCOME OF CERTAIN INDIVIDUALS.

(a) IN GENERAL.—Section 931 (relating to income from sources within possessions of the United States) is amended to read as follows: "SEC. 931. INCOME FROM SOURCES WITHIN GUAM. AMERICAN SAMOA. OR THE NORTHERN MARIANA ISLANDS. "(a) GENERAL RULE. — I n the case of a n individual who is a bona

fide resident of a specified possession during the e n t i r e taxable year, gross income shall not include— "(1) income derived from sources within any specified possession, and "(2) income effectively connected with the conduct of a trade or business by such individual within any specified possession. "(b) DEDUCTIONS, E T C. ALLOCABLE TO EXCLUDED A M O U N T S N O T

ALLOWABLE.—An individual shall not be allowed— "(1) as a deduction from gross income any deductions (other than the deduction under section 151, relating to personal exemptions), or "(2) any credit, properly allocable or chargeable against a m o u n t s excluded from gross income under this section. "(c) SPECIFIED POSSESSION.—For purposes of this section, the term 'specified possession' means G u a m, American Samoa, and the Northern M a r i a n a Islands. "(d) SPECIAL RULES. — For purposes of t h i s section— "(1) EMPLOYEES OF THE UNITED STATES.—Amounts paid

for

services performed a s a n employee of the United States (or any agency thereoO shall be treated as not described in paragraph (1) or (2) of subsection (a). "(2) DETERMINATION OF SOURCE, ETC.—The determination as to

w h e the r income is described in paragraph (1) or (2) of subsection (a) shall be made under regulations prescribed by the Secretary. "(8) DETERMINATION OF RESIDENCY.—For purposes of t h i s sec-

tion and section 876, the determination of w h e the r a n individual is a bona fide resident of Guam, American Samoa, or the Northern M a r i a n a Islands shall be made under regulations prescribed by the Secretary." (b) EXEMPTION F R O M WITHHOLDING T A X; T A X IMPOSED BY SEC-

TION 1.—Section 876 (relating to alien residents of P u e r to Rico) is amended to read as follows: •SEC. 876. ALIEN RESIDENTS OF PUERTO RICO. GUAM. AMERICAN SAMOA. OR THE NORTHERN MARIANA ISLANDS.

"(a) GENERAL RULE.—This subpart shall not apply to any alien individual who is a bona fide resident of P u e r to Rico, G u a m, American Samoa, or the Northern M a r i a n a Islands during the e n t i r e taxable year and such alien shall be subject to the tax imposed by section 1.

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