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

Sources of Income

Determining Income Source

Royalties from patents, copyrights, etc.

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 similar 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.