§937 — Title 26 Internal Revenue Code | U.S. Code

§937 Residence and source rules involving possessions

Title 26 › Subtitle Subtitle A— - Income Taxes › Chapter CHAPTER 1— - NORMAL TAXES AND SURTAXES › Subchapter Subchapter N— - Tax Based on Income From Sources Within or Without the United States › Part PART III— - INCOME FROM SOURCES WITHOUT THE UNITED STATES › Subpart Subpart D— - Possessions of the United States › § 937

Last updated Apr 6, 2026|Official source

Summary

Defines who counts as a "bona fide resident" of Guam, American Samoa, the Northern Mariana Islands, Puerto Rico, or the Virgin Islands and sets rules about where income is treated as coming from. A "bona fide resident" means a person who is present at least 183 days in the taxable year in one of those possessions and who does not have a tax home outside that possession or closer ties to the United States or another country than to that possession. Rules like the ones used to decide U.S. source income or income connected to a U.S. trade or business are used to decide if income is from one of those possessions or tied to a trade or business there. If income is treated as U.S. source income or connected to a U.S. trade or business, it cannot also be treated as from the possession. If someone reports on their U.S. tax return that they became or stopped being a bona fide resident of one of these possessions, they must file a notice with the IRS when and how the IRS requires. If the person took that position in any of the three tax years that ended before their first tax year ending after this rule was enacted, they must also file the notice.

Title 26, §937

Internal Revenue Code — Source: USLM XML via OLRC

(a)For purposes of this subpart, section 865(g)(3), section 876, section 881(b), paragraphs (2) and (3) of section 901(b), section 957(c), section 3401(a)(8)(C), and section 7654(a), except as provided in regulations, the term “bona fide resident” means a person—

(1)who is present for at least 183 days during the taxable year in Guam, American Samoa, the Northern Mariana Islands, Puerto Rico, or the Virgin Islands, as the case may be, and

(2)who does not have a tax home (determined under the principles of section 911(d)(3) without regard to the second sentence thereof) outside such specified possession during the taxable year and does not have a closer connection (determined under the principles of section 7701(b)(3)(B)(ii)) to the United States or a foreign country than to such specified possession.

(b)Except as provided in regulations, for purposes of this title—

(1)except as provided in paragraph (2), rules similar to the rules for determining whether income is income from sources within the United States or is effectively connected with the conduct of a trade or business within the United States shall apply for purposes of determining whether income is from sources within a possession specified in subsection (a)(1) or effectively connected with the conduct of a trade or business within any such possession, and

(2)any income treated as income from sources within the United States or as effectively connected with the conduct of a trade or business within the United States shall not be treated as income from sources within any such possession or as effectively connected with the conduct of a trade or business within any such possession.

(c)(1)If, for any taxable year, an individual takes the position for United States income tax reporting purposes that the individual became, or ceases to be, a bona fide resident of a possession specified in subsection (a)(1), such individual shall file with the Secretary, at such time and in such manner as the Secretary may prescribe, notice of such position.

(2)If, for any of an individual’s 3 taxable years ending before the individual’s first taxable year ending after the date of the enactment of this subsection, the individual took a position described in paragraph (1), the individual shall file with the Secretary, at such time and in such manner as the Secretary may prescribe, notice of such position.

Notes & Related Subsidiaries

Editorial Notes

References in Text

The date of the enactment of this subsection, referred to in subsec. (c)(2), is the date of enactment of Pub. L. 108–357, which was approved Oct. 22, 2004.

Statutory Notes and Related Subsidiaries

Effective Date

Pub. L. 108–357, title VIII, § 908(d), Oct. 22, 2004, 118 Stat. 1657, provided that: “(1) In general.—Except as otherwise provided in this subsection, the

Amendments

made by this section [enacting this section and amending section 931, 932, 934, 935, 957, and 6688 of this title] shall apply to taxable years ending after the date of the enactment of this Act [Oct. 22, 2004]. “(2) 183-day rule.—section 937(a)(1) of the Internal Revenue Code of 1986 (as added by this section) shall apply to taxable years beginning after the date of the enactment of this Act. “(3) Sourcing.—section 937(b)(2) of such Code (as so added) shall apply to income earned after the date of the enactment of this Act.”