Interest paid to an unrelated party by a domestic corporation that historically earns more than 50% of its gross income each year from the conduct of an active trade or business outside the United States is foreign-source income.

Question

Quizplus · Accepted Answer

Interest income is generally sourced based on the residence of the payer. Therefore, interest paid by a domestic corporation is considered U.S.-source income, regardless of the corporation's income composition or where its business activities are conducted.

Interest Paid to an Unrelated Party by a Domestic Corporation