Pedro, a nonresident alien, licenses a patent to a U.S. company for an $11 per unit fee for each unit produced. As a result of receiving the fee, Pedro must recognize the fee as

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As a nonresident alien, Pedro's licensing fee income from the U.S. company is considered effectively connected income and subject to U.S. taxation at ordinary income tax rates. Therefore, Pedro must recognize the fee as ordinary income taxable in the United States.

Pedro, a Nonresident Alien, Licenses a Patent to a U