Question

a nonresident alien who derives income (that is otherwise not effectively connected) from real property located in the U.S. and held for the production of income may elect to follow which treatment?

A) All income from the real property as effectively connected with a U.S. trade or business.

B) All income from the real property as foreign-source income.

C) All income from the real property as capital gain.

D) Part of the income as effectively connected and part as capital gain.

Answer 1

If the non resident alien derives income from real property located in U.S and held for the production of income may go under "internal revenue code sec 871d" which states that the income from real property will treated as effectively connected with U.S trade or business.some of the examples are income from rent,gas wells etc

This Option is not mandatory.he may or maynot choose

if the person does want to elect the option then he may fill form 1040X without the approval of internal revenue code for that year

So option A he may elect