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

Sources of Income

Determining Income Source

Other Royalties Income

Where Property is Used

For the following types of royalties, the income source is determined by where the property is used:

  • Patents
  • Copyrights
  • Secret processes and formulas
  • Goodwill
  • Trademarks
  • Franchises
  • Other like property

A Puerto Rican resident who earns royalties from a patent used in a factory in the U.S. receives U.S. source income.

Source Rules table with patents, copyrights, etc. row highlighted.