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IRS.gov Website
Publication 519
taxmap/pubs/p519-014.htm#en_us_publink1000222305

Nonresident Aliens(p17)

rule
A nonresident alien's income that is subject to U.S. income tax must be divided into two categories:
  1. Income that is effectively connected with a trade or business in the United States, and
  2. Income that is not effectively connected with a trade or business in the United States (discussed under The 30% Tax, later).
The difference between these two categories is that effectively connected income, after allowable deductions, is taxed at graduated rates. These are the same rates that apply to U.S. citizens and residents. Income that is not effectively connected is taxed at a flat 30% (or lower treaty) rate.
EIC
If you were formerly a U.S. citizen or resident alien, these rules may not apply. See Expatriation Tax, later, in this chapter.
taxmap/pubs/p519-014.htm#en_us_publink1000222308

Trade or Business
in the United States(p17)

rule
Generally, you must be engaged in a trade or business during the tax year to be able to treat income received in that year as effectively connected with that trade or business. Whether you are engaged in a trade or business in the United States depends on the nature of your activities. The discussions that follow will help you determine whether you are engaged in a trade or business in the United States.
taxmap/pubs/p519-014.htm#en_us_publink1000222309

Personal Services(p17)

rule
If you perform personal services in the United States at any time during the tax year, you usually are considered engaged in a trade or business in the United States.
Tax Tip
Certain compensation paid to a nonresident alien by a foreign employer is not included in gross income. For more information, see Services Performed for Foreign Employer in chapter 3.
taxmap/pubs/p519-014.htm#en_us_publink1000222312

Other Trade or Business Activities(p17)

rule
Other examples of being engaged in a trade or business in the United States follow.
taxmap/pubs/p519-014.htm#en_us_publink1000222313

Students and trainees.(p17)

rule
You are considered engaged in a trade or business in the United States if you are temporarily present in the United States as a nonimmigrant under an "F," "J," "M," or "Q" visa. A nonresident alien temporarily present in the United States under a "J" visa includes a nonresident alien individual admitted to the United States as an exchange visitor under the Mutual Educational and Cultural Exchange Act of 1961. The taxable part of any scholarship or fellowship grant that is U.S. source income is treated as effectively connected with a trade or business in the United States.
taxmap/pubs/p519-014.htm#en_us_publink1000222314

Business operations.(p17)

rule
If you own and operate a business in the United States selling services, products, or merchandise, you are, with certain exceptions, engaged in a trade or business in the United States.
taxmap/pubs/p519-014.htm#en_us_publink1000222315

Partnerships.(p17)

rule
If you are a member of a partnership that at any time during the tax year is engaged in a trade or business in the United States, you are considered to be engaged in a trade or business in the United States.
taxmap/pubs/p519-014.htm#en_us_publink1000222316

Beneficiary of an estate or trust.(p17)

rule
If you are the beneficiary of an estate or trust that is engaged in a trade or business in the United States, you are treated as being engaged in the same trade or business.
taxmap/pubs/p519-014.htm#en_us_publink1000222317

Trading in stocks, securities, and commodities.(p17)

rule
If your only U.S. business activity is trading in stocks, securities, or commodities (including hedging transactions) through a U.S. resident broker or other agent, you are not engaged in a trade or business in the United States.
For transactions in stocks or securities, this applies to any nonresident alien, including a dealer or broker in stocks and securities.
For transactions in commodities, this applies to commodities that are usually traded on an organized commodity exchange and to transactions that are usually carried out at such an exchange.
This discussion does not apply if you have a U.S. office or other fixed place of business at any time during the tax year through which, or by the direction of which, you carry out your transactions in stocks, securities, or commodities.
taxmap/pubs/p519-014.htm#en_us_publink1000222318
Trading for a nonresident alien's own account.(p17)
You are not engaged in a trade or business in the United States if trading for your own account in stocks, securities, or commodities is your only U.S. business activity. This applies even if the trading takes place while you are present in the United States or is done by your employee or your broker or other agent.
This does not apply to trading for your own account if you are a dealer in stocks, securities, or commodities. This does not necessarily mean, however, that as a dealer you are considered to be engaged in a trade or business in the United States. Determine that based on the facts and circumstances in each case or under the rules given above in Trading in stocks, securities, and commodities.
taxmap/pubs/p519-014.htm#en_us_publink1000222320

Effectively
Connected Income(p17)

rule
If you are engaged in a U.S. trade or business, all income, gain, or loss for the tax year that you get from sources within the United States (other than certain investment income) is treated as effectively connected income. This applies whether or not there is any connection between the income and the trade or business being carried on in the United States during the tax year.
Two tests, described next under Investment Income, determine whether certain items of investment income (such as interest, dividends, and royalties) are treated as effectively connected with that business.
In limited circumstances, some kinds of foreign source income may be treated as effectively connected with a trade or business in the United States. For a discussion of these rules, see Foreign Income, later.
taxmap/pubs/p519-014.htm#en_us_publink1000222322

Investment Income(p18)

rule
Investment income from U.S. sources that may or may not be treated as effectively connected with a U.S. trade or business generally falls into the following three categories.
  1. Fixed or determinable income (interest, dividends, rents, royalties, premiums, annuities, etc.).
  2. Gains (some of which are considered capital gains) from the sale or exchange of the following types of property.
    1. Timber, coal, or domestic iron ore with a retained economic interest.
    2. Patents, copyrights, and similar property on which you receive contingent payments after October 4, 1966.
    3. Patents transferred before October 5, 1966.
    4. Original issue discount obligations.
  3. Capital gains (and losses).
Use the two tests, described next, to determine whether an item of U.S. source income falling in one of the three categories above and received during the tax year is effectively connected with your U.S. trade or business. If the tests indicate that the item of income is effectively connected, you must include it with your other effectively connected income. If the item of income is not effectively connected, include it with all other income discussed under The 30% Tax later, in this chapter.
taxmap/pubs/p519-014.htm#en_us_publink1000222324

Asset-use test.(p18)

rule
This test usually applies to income that is not directly produced by trade or business activities. Under this test, if an item of income is from assets (property) used in, or held for use in, the trade or business in the United States, it is considered effectively connected.
An asset is used in, or held for use in, the trade or business in the United States if the asset is: Generally, stock of a corporation is not treated as an asset used in, or held for use in, a trade or business in the United States.
taxmap/pubs/p519-014.htm#en_us_publink1000222325

Business-activities test.(p18)

rule
This test usually applies when income, gain, or loss comes directly from the active conduct of the trade or business. The business-activities test is most important when: Under this test, if the conduct of the U.S. trade or business was a material factor in producing the income, the income is considered effectively connected.
taxmap/pubs/p519-014.htm#en_us_publink1000222326

Personal Service Income(p18)

rule
You usually are engaged in a U.S. trade or business when you perform personal services in the United States. Personal service income you receive in a tax year in which you are engaged in a U.S. trade or business is effectively connected with a U.S. trade or business. Income received in a year other than the year you performed the services is also effectively connected if it would have been effectively connected if received in the year you performed the services. Personal service income includes wages, salaries, commissions, fees, per diem allowances, and employee allowances and bonuses. The income may be paid to you in the form of cash, services, or property.
If you are engaged in a U.S. trade or business only because you perform personal services in the United States during the tax year, income and gains from assets, and gains and losses from the sale or exchange of capital assets are generally not effectively connected with your trade or business. However, if there is a direct economic relationship between your holding of the asset and your trade or business of performing personal services, the income, gain, or loss is effectively connected.
taxmap/pubs/p519-014.htm#en_us_publink1000222327

Pensions.(p18)

rule
If you were a nonresident alien engaged in a U.S. trade or business after 1986 because you performed personal services in the United States, and you later receive a pension or retirement pay attributable to these services, such payments are effectively connected income in each year you receive them. This is true whether or not you are engaged in a U.S. trade or business in the year you receive the retirement pay.
taxmap/pubs/p519-014.htm#en_us_publink1000222328

Transportation Income(p18)

rule
Transportation income (defined in chapter 2) is effectively connected if you meet both of the following conditions.
  1. You had a fixed place of business in the United States involved in earning the income.
  2. At least 90% of your U.S. source transportation income is attributable to regularly scheduled transportation.
"Fixed place of business" generally means a place, site, structure, or other similar facility through which you engage in a trade or business. "Regularly scheduled transportation" means that a ship or aircraft follows a published schedule with repeated sailings or flights at regular intervals between the same points for voyages or flights that begin or end in the United States. This definition applies to both scheduled and chartered air transportation.
If you do not meet the two conditions above, the income is not effectively connected and is taxed at a 4% rate. See Transportation Tax, later, in this chapter.
taxmap/pubs/p519-014.htm#en_us_publink1000222330

Business Profits and Losses
and Sales Transactions(p18)

rule
All profits or losses from U.S. sources that are from the operation of a business in the United States are effectively connected with a trade or business in the United States. For example, profit from the sale in the United States of inventory property purchased either in this country or in a foreign country is effectively connected trade or business income. A share of U.S. source profits or losses of a partnership that is engaged in a trade or business in the United States is also effectively connected with a trade or business in the United States.
taxmap/pubs/p519-014.htm#en_us_publink1000222331

Real Property Gain or Loss(p18)

rule
Gains and losses from the sale or exchange of U.S. real property interests (whether or not they are capital assets) are taxed as if you are engaged in a trade or business in the United States. You must treat the gain or loss as effectively connected with that trade or business.
taxmap/pubs/p519-014.htm#en_us_publink1000222332

U.S. real property interest.(p18)

rule
This is any interest in real property located in the United States or the U.S. Virgin Islands or any interest (other than as a creditor) in a domestic corporation that is a U.S. real property holding corporation. Real property includes the following.
  1. Land and unsevered natural products of the land, such as growing crops and timber, and mines, wells, and other natural deposits.
  2. Improvements on land, including buildings, other permanent structures, and their structural components.
  3. Personal property associated with the use of real property, such as equipment used in farming, mining, forestry, or construction or property used in lodging facilities or rented office space, unless the personal property is:
    1. Disposed of more than one year before or after the disposition of the real property, or
    2. Separately sold to persons unrelated either to the seller or to the buyer of the real property.
taxmap/pubs/p519-014.htm#en_us_publink1000222333
U.S. real property holding corporation.(p18)
A corporation is a U.S. real property holding corporation if the fair market value of the corporation's U.S. real property interests are at least 50% of the total fair market value of:
Gain or loss on the sale of the stock in any domestic corporation is taxed as if you are engaged in a U.S. trade or business unless you establish that the corporation is not a U.S. real property holding corporation.
A U.S. real property interest does not include a class of stock of a corporation that is regularly traded on an established securities market, unless you hold more than 5% of the fair market value of that class of stock. An interest in a foreign corporation owning U.S. real property generally is not a U.S. real property interest unless the corporation chooses to be treated as a domestic corporation.
taxmap/pubs/p519-014.htm#en_us_publink1000222334

Qualified investment entities.(p19)

rule
Special rules apply to qualified investment entities (QIEs). A QIE is any real estate investment trust (REIT) or any regulated investment company (RIC) that is a U.S. real property holding corporation.
Generally, any distribution from a QIE to a shareholder that is attributable to gain from the sale or exchange of a U.S. real property interest is treated as a U.S. real property gain by the shareholder receiving the distribution. A distribution by a QIE on stock regularly traded on an established securities market in the United States is not treated as gain from the sale or exchange of a U.S. real property interest if you did not own more than 5% of that stock at any time during the 1-year period ending on the date of the distribution. A distribution that you do not treat as gain from the sale or exchange of a U.S. real property interest is included in your gross income as a regular dividend.
Note.Beginning January 1, 2014 (unless extended by legislation), a RIC that is a U.S. real property holding corporation will only be treated as a QIE for certain distributions from the RIC that are directly or indirectly attributable to distributions received by the RIC from a REIT.
taxmap/pubs/p519-014.htm#en_us_publink1000222335
Domestically controlled QIE.(p19)
The sale of an interest in a domestically controlled QIE is not the sale of a U.S. real property interest. The entity is domestically controlled if at all times during the testing period less than 50% in value of its stock was held, directly or indirectly, by foreign persons. The testing period is the shorter of (a) the 5-year period ending on the date of disposition, or (b) the period during which the entity was in existence.
taxmap/pubs/p519-014.htm#en_us_publink1000222336
Wash sale. (p19)
If you dispose of an interest in a domestically controlled QIE in an applicable wash sale transaction, special rules apply. An applicable wash sale transaction is one in which you:
  1. Dispose of an interest in the domestically controlled QIE during the 30-day period before the ex-dividend date of a distribution that you would (but for the disposition) have treated as gain from the sale or exchange of a U.S. real property interest, and
  2. Acquire, or enter into a contract or option to acquire, a substantially identical interest in that entity during the 61-day period that began on the first day of the 30-day period.
If this occurs, you are treated as having gain from the sale or exchange of a U.S. real property interest in an amount equal to the distribution made after June 15, 2006, that would have been treated as such gain. This also applies to any substitute dividend payment.
A transaction is not treated as an applicable wash sale transaction if:
taxmap/pubs/p519-014.htm#en_us_publink1000222337

Alternative minimum tax.(p19)

rule
There may be a minimum tax on your net gain from the disposition of U.S. real property interests. Figure the amount of this tax, if any, on Form 6251.
taxmap/pubs/p519-014.htm#en_us_publink1000222338

Withholding of tax.(p19)

rule
If you dispose of a U.S. real property interest, the buyer may have to withhold tax. See the discussion of Tax Withheld on Real Property Sales in chapter 8.
taxmap/pubs/p519-014.htm#en_us_publink1000222340

Foreign Income(p19)

rule
You must treat three kinds of foreign source income as effectively connected with a trade or business in the United States if:
An office or other fixed place of business is a material factor if it significantly contributes to, and is an essential economic element in, the earning of the income.
The three kinds of foreign source income are listed below.
  1. Rents and royalties for the use of, or for the privilege of using, intangible personal property located outside the United States or from any interest in such property. Included are rents or royalties for the use, or for the privilege of using, outside the United States, patents, copyrights, secret processes and formulas, goodwill, trademarks, trade brands, franchises, and similar properties if the rents or royalties are from the active conduct of a trade or business in the United States.
  2. Dividends, interest, or amounts received for the provision of a guarantee of indebtedness issued after September 27, 2010, from the active conduct of a banking, financing, or similar business in the United States. A substitute dividend or interest payment received under a securities lending transaction or a sale-repurchase transaction is treated the same as the amounts received on the transferred security.
  3. Income, gain, or loss from the sale outside the United States, through the U.S. office or other fixed place of business, of:
    1. Stock in trade,
    2. Property that would be included in inventory if on hand at the end of the tax year, or
    3. Property held primarily for sale to customers in the ordinary course of business.
    Item (3) will not apply if you sold the property for use, consumption, or disposition outside the United States and an office or other fixed place of business in a foreign country was a material factor in the sale.
Any foreign source income that is equivalent to any item of income described above is treated as effectively connected with a U.S. trade or business. For example, foreign source interest and dividend equivalents are treated as U.S. effectively connected income if the income is derived by a foreign person in the active conduct of a banking, financing, or similar business within the United States.
taxmap/pubs/p519-014.htm#en_us_publink1000222341

Tax on Effectively
Connected Income(p19)

rule
Income you receive during the tax year that is effectively connected with your trade or business in the United States is, after allowable deductions, taxed at the rates that apply to U.S. citizens and residents.
Generally, you can receive effectively connected income only if you are a nonresident alien engaged in trade or business in the United States during the tax year. However, income you receive from the sale or exchange of property, the performance of services, or any other transaction in another tax year is treated as effectively connected in that year if it would have been effectively connected in the year the transaction took place or you performed the services.
taxmap/pubs/p519-014.htm#en_us_publink1000222342

Example.(p19)

Ted Richards, a nonresident alien, entered the United States in August 2012, to perform personal services in the U.S. office of his overseas employer. He worked in the U.S. office until December 25, 2012, but did not leave this country until January 11, 2013. On January 8, 2013, he received his final paycheck for services performed in the United States during 2012. All of Ted's income during his stay here is U.S. source income.
During 2012, Ted was engaged in the trade or business of performing personal services in the United States. Therefore, all amounts paid to him in 2012 for services performed in the United States during 2012 are effectively connected with that trade or business during 2012.
The salary payment Ted received in January 2013 is U.S. source income to him in 2013. It is effectively connected with a trade or business in the United States because he was engaged in a trade or business in the United States during 2012 when he performed the services that earned the income.
taxmap/pubs/p519-014.htm#en_us_publink1000222343

Real property income.(p20)

rule
You may be able to choose to treat all income from real property as effectively connected. See Income From Real Property, later, in this chapter.
taxmap/pubs/p519-014.htm#en_us_publink1000222345

The 30% Tax(p20)

rule
Tax at a 30% (or lower treaty) rate applies to certain items of income or gains from U.S. sources but only if the items are not effectively connected with your U.S. trade or business.
taxmap/pubs/p519-014.htm#en_us_publink1000222346

Fixed or Determinable Income(p20)

rule
The 30% (or lower treaty) rate applies to the gross amount of U.S. source fixed or determinable annual or periodic gains, profits, or income.
Income is fixed when it is paid in amounts known ahead of time. Income is determinable whenever there is a basis for figuring the amount to be paid. Income can be periodic if it is paid from time to time. It does not have to be paid annually or at regular intervals. Income can be determinable or periodic even if the length of time during which the payments are made is increased or decreased.
Items specifically included as fixed or determinable income are interest (other than original issue discount), dividends, dividend equivalent payments (defined in chapter 2), rents, premiums, annuities, salaries, wages, and other compensation. A substitute dividend or interest payment received under a securities lending transaction or a sale-repurchase transaction is treated the same as the amounts received on the transferred security. Other items of income, such as royalties, also may be subject to the 30% tax.
Tax Tip
Some fixed or determinable income may be exempt from U.S. tax. See chapter 3 if you are not sure whether the income is taxable.
taxmap/pubs/p519-014.htm#en_us_publink1000222349

Original issue discount (OID).(p20)

rule
If you sold, exchanged, or received a payment on a bond or other debt instrument that was issued at a discount after March 31, 1972, all or part of the original issue discount (OID) (other than portfolio interest) may be subject to the 30% tax. The amount of OID is the difference between the stated redemption price at maturity and the issue price of the debt instrument. The 30% tax applies in the following circumstances.
  1. You received a payment on a debt instrument. In this case, the amount of OID subject to tax is the OID that accrued while you held the debt instrument minus the OID previously taken into account. But the tax on the OID cannot be more than the payment minus the tax on the interest payment on the debt instrument.
  2. You sold or exchanged the debt instrument. The amount of OID subject to tax is the OID that accrued while you held the debt instrument minus the amount already taxed in (1) above.
Report on your return the amount of OID shown on Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, if you bought the debt instrument at original issue. However, you must recompute your proper share of OID shown on Form 1042-S if any of the following apply. For the definition of premium and acquisition premium and instructions on how to recompute OID, get Publication 1212.
If you held a bond or other debt instrument that was issued at a discount before April 1, 1972, contact the IRS for further information. See chapter 12.
taxmap/pubs/p519-014.htm#en_us_publink1000222351

Gambling Winnings(p20)

rule
In general, nonresident aliens are subject to the 30% tax on the gross proceeds from gambling won in the United States if that income is not effectively connected with a U.S. trade or business and is not exempted by treaty. However, no tax is imposed on nonbusiness gambling income a nonresident alien wins playing blackjack, baccarat, craps, roulette, or big-6 wheel in the United States.
Nonresident aliens are taxed at graduated rates on net gambling income won in the United States that is effectively connected with a U.S. trade or business.
taxmap/pubs/p519-014.htm#en_us_publink1000222352

Social Security Benefits(p20)

rule
A nonresident alien must include 85% of any U.S. social security benefit (and the social security equivalent part of a tier 1 railroad retirement benefit) in U.S. source fixed or determinable annual or periodic income. Social security benefits include monthly retirement, survivor, and disability benefits. This income is exempt under some tax treaties. See Table 1 in Publication 901, U.S. Tax Treaties, for a list of tax treaties that exempt U.S. social security benefits from U.S. tax.
taxmap/pubs/p519-014.htm#en_us_publink1000222353

Sales or Exchanges
of Capital Assets(p20)

rule
These rules apply only to those capital gains and losses from sources in the United States that are not effectively connected with a trade or business in the United States. They apply even if you are engaged in a trade or business in the United States. These rules do not apply to the sale or exchange of a U.S. real property interest or to the sale of any property that is effectively connected with a trade or business in the United States. See Real Property Gain or Loss, earlier, under Effectively Connected Income.
A capital asset is everything you own except:
A capital gain is a gain on the sale or exchange of a capital asset. A capital loss is a loss on the sale or exchange of a capital asset.
If the sale is in foreign currency, for the purpose of determining gain, the cost and selling price of the property should be expressed in U.S. currency at the rate of exchange prevailing as of the date of the purchase and date of the sale, respectively.
You may want to read Publication 544. However, use Publication 544 only to determine what is a sale or exchange of a capital asset, or what is treated as such. Specific tax treatment that applies to U.S. citizens or residents generally does not apply to you.
The following gains are subject to the 30% (or lower treaty) rate without regard to the 183-day rule, discussed later.
  1. Gains on the disposal of timber, coal, or domestic iron ore with a retained economic interest.
  2. Gains on contingent payments received from the sale or exchange of patents, copyrights, and similar property after October 4, 1966.
  3. Gains on certain transfers of all substantial rights to, or an undivided interest in, patents if the transfers were made before October 5, 1966.
  4. Gains on the sale or exchange of original issue discount obligations.
Gains in (1) are not subject to the 30% (or lower treaty) rate if you choose to treat the gains as effectively connected with a U.S. trade or business. See Income From Real Property, later.
taxmap/pubs/p519-014.htm#en_us_publink1000222356

183-day rule.(p20)

rule
If you were in the United States for 183 days or more during the tax year, your net gain from sales or exchanges of capital assets is taxed at a 30% (or lower treaty) rate. For purposes of the 30% (or lower treaty) rate, net gain is the excess of your capital gains from U.S. sources over your capital losses from U.S. sources. This rule applies even if any of the transactions occurred while you were not in the United States.
To determine your net gain, consider the amount of your gains and losses that would be recognized and taken into account only if, and to the extent that, they would be recognized and taken into account if you were in a U.S. trade or business during the year and the gains and losses were effectively connected with that trade or business during the tax year.
In arriving at your net gain, do not take the following into consideration.
If you are not engaged in a trade or business in the United States and have not established a tax year for a prior period, your tax year will be the calendar year for purposes of the 183-day rule. Also, you must file your tax return on a calendar-year basis.
If you were in the United States for less than 183 days during the tax year, capital gains (other than gains listed earlier) are tax exempt unless they are effectively connected with a trade or business in the United States during your tax year.
taxmap/pubs/p519-014.htm#en_us_publink1000222358

Reporting.(p21)

rule
Report your gains and losses from the sales or exchanges of capital assets that are not effectively connected with a trade or business in the United States on page 4 of Form 1040NR. Report gains and losses from sales or exchanges of capital assets (including real property) that are effectively connected with a trade or business in the United States on a separate Schedule D (Form 1040), Form 4797, or both. Attach them to Form 1040NR.
taxmap/pubs/p519-014.htm#en_us_publink1000222359

Income From Real Property(p21)

rule
If you have income from real property located in the United States that you own or have an interest in and hold for the production of income, you can choose to treat all income from that property as income effectively connected with a trade or business in the United States. The choice applies to all income from real property located in the United States and held for the production of income and to all income from any interest in such property. This includes income from rents, royalties from mines, oil or gas wells, or other natural resources. It also includes gains from the sale or exchange of timber, coal, or domestic iron ore with a retained economic interest.
You can make this choice only for real property income that is not otherwise effectively connected with your U.S. trade or business.
If you make the choice, you can claim deductions attributable to the real property income and only your net income from real property is taxed.
This choice does not treat a nonresident alien, who is not otherwise engaged in a U.S. trade or business, as being engaged in a trade or business in the United States during the year.
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Example.(p21)

You are a nonresident alien and are not engaged in a U.S. trade or business. You own a single-family house in the United States that you rent out. Your rental income for the year is $10,000. This is your only U.S. source income. As discussed earlier under The 30% Tax, the rental income is subject to a tax at a 30% (or lower treaty) rate. You received a Form 1042-S showing that your tenants properly withheld this tax from the rental income. You do not have to file a U.S. tax return (Form 1040NR) because your U.S. tax liability is satisfied by the withholding of tax.
If you make the choice discussed earlier, you can offset the $10,000 income by certain rental expenses. (See Publication 527, Residential Rental Property, for information on rental expenses.) Any resulting net income is taxed at graduated rates. If you make this choice, report the rental income and expenses on Schedule E (Form 1040) and attach the schedule to Form 1040NR. For the first year you make the choice, also attach the statement discussed next.
taxmap/pubs/p519-014.htm#en_us_publink1000222361

Making the choice.(p21)

rule
Make the initial choice by attaching a statement to your return, or amended return, for the year of the choice. Include the following in your statement.
This choice stays in effect for all later tax years unless you revoke it.
taxmap/pubs/p519-014.htm#en_us_publink1000222362

Revoking the choice.(p21)

rule
You can revoke the choice without IRS approval by filing Form 1040X, Amended U.S. Individual Income Tax Return, for the year you made the choice and for later tax years. You must file Form 1040X within 3 years from the date your return was filed or 2 years from the time the tax was paid, whichever is later. If this time period has expired for the year of choice, you cannot revoke the choice for that year. However, you may revoke the choice for later tax years only if you have IRS approval. For information on how to get IRS approval, see Regulation section 1.871-10(d)(2).
taxmap/pubs/p519-014.htm#en_us_publink1000222363

Transportation Tax(p21)

rule
A 4% tax rate applies to transportation income that is not effectively connected because it does not meet the two conditions listed earlier under Transportation Income. If you receive transportation income subject to the 4% tax, you should figure the tax and show it on line 57 of Form 1040NR. Attach a statement to your return that includes the following information (if applicable).
This 4% tax applies to your U.S. source gross transportation income. This only includes transportation income that is treated as derived from sources in the United States if the transportation begins or ends in the United States. For transportation income from personal services, the transportation must be between the United States and a U.S. possession. For personal services of a nonresident alien, this only applies to income derived from, or in connection with, an aircraft.