Is this considered foreign source or US source income?

speer · Post by **speer** » Sun Mar 05, 2017 11:45 pm

I am a US citizen and a Canadian citizen and am a resident in Canada.

If I was to sell inventory through Amazon FBA in the US would this be considered US source income or foreign? "I" didn't take part in the transaction itself in the states, I simply ship things to Amazon to sell and fulfill for me.

From my understanding of the IRS's definition of US source income, I must be present in the US while partaking in a transaction / business for it to be considered "US source". Inventory may complicate the matter on the exact source of income.

Any input?

nelsona · Post by **nelsona** » Mon Mar 06, 2017 12:00 am

I don't think you would have an issue claiming this as Cdn-sourced.

speer · Post by **speer** » Mon Mar 06, 2017 12:34 am

Even though the transaction is in the US and changes hands to a US buyer? I am getting conflicting views from others saying this would be US source because its being sold and purchased in the US.

nelsona · Post by **nelsona** » Mon Mar 06, 2017 10:08 am

this is considered "Business Income", which by treaty is sourced by residency unless you have a permanent establishment in US. I wouldn't say you do.

testone · Post by **testone** » Mon Mar 06, 2017 10:35 am

I agree. U.S. sourced income, but resourced as foreign under the treaty.

nelsona · Post by **nelsona** » Mon Mar 06, 2017 11:34 am

Indeed. Since this income is going to be reported on both returns, the only thing that matter s is treaty sourcing, since that alone will determine how it is tax (or, more correctly, how credits on 1116 will be determined: either Cdn-sourced, or Cdn-sourced by treaty.