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
A)ordinary income taxable in the United States.
B)capital gain taxable in the United States.
C)no gain or income taxed in the United States.
D)a portion of the gain, depending on the number of days Pedro is physically present in the United States during the current year.

Question

Quizplus · Accepted Answer

The licensing fee received by Pedro is considered ordinary income and is subject to U.S. income tax as he is a nonresident alien receiving income from sources within the United States.

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