Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Sources of Income

Determining Income Source

Dividend Income

Location of Payer

The source of income from dividends is determined by the location of the payer. Dividends from corporations located:

  • In the U.S. are U.S. source income
  • In Puerto Rico are Puerto Rico source income
  • Anywhere else are foreign source income

Capital Gain Distributions

The source of income of capital gains distributions received by residents of Puerto Rico from a U.S. regulated investment company (RIC) is considered Puerto Rico source income that is exempt from U.S. tax under Section 933.

Source Rules table with dividends row highlighted.