Marcel, a U.S. citizen, receives interest income from bonds issued by a Dutch corporation. The interest income will be considered U.S. source income for U.S. tax purposes.
The interest is sourced based on the residence of the corporation paying the interest.

Question

Quizplus · Accepted Answer

The source of the interest income is determined based on the residence of the payer, not the issuer. Since the Dutch corporation is the issuer, the interest income would be considered foreign source income for U.S. tax purposes.