IRC section 861(a)(3) and (4): US-source compensation for services and US-source royalties (26 U.S.C. 861(a)(3), (a)(4))
A fee for work is US-source only when the work is done in the United States, while a royalty for a licence is US-source when the property is used in the United States. A holder abroad that licenses records to a US lab that uses them in the US has US-source royalty income.
Dated 18 Oct 2026Source checked 18 Oct 2026Basis: primary text
In the source's own words
“Compensation for labor or personal services performed in the United States; ... Rentals or royalties from property located in the United States or from any interest in such property, including rentals or royalties for the use of or for the privilege of using in the United States patents, copyrights, secret processes and formulas, good will, trade-marks, trade brands, franchises, and other like property.”
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