IRS CCA: Clarifying Sourcing Rules for Personal Property Sales by Partnerships in Puerto Rico (IRC §937)

The Chief Counsel’s Office advised on the applicability of Treas. Reg. §1.937-2(f)(1)(i) regarding the sourcing of income from personal property sales by partnerships involving bona fide residents of Puerto Rico. This guidance clarifies that income from such sales generally qualifies as Puerto Rico source income, sourced at the partner level per IRC §865(i)(5). Thus, Treas. Reg. §1.937-2(f)(1)(i) applies, treating partnership sales as equivalent to partner sales for sourcing purposes. [CCA 202538025]

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