[Code of Federal Regulations]
[Title 26, Volume 18]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR301.7701(b)-5]

[Page 666-667]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 301_PROCEDURE AND ADMINISTRATION--Table of Contents
 
                               Definitions
 
Sec. 301.7701(b)-5  Coordination with section 877.

    (a) General rule. An alien individual will be subject to United 
States income tax in the manner provided by section 877, regardless of 
whether the individual has a tax avoidance motive, if--
    (1) The alien individual is a resident alien of the United States 
for at least three consecutive calendar years (the initial residency 
period) beginning after December 31, 1984;
    (2) The period of residence for each of the three consecutive 
calendar years includes at least 183 days;
    (3) The alien is once again taxed as a nonresident (including an 
individual taxed as a nonresident) under Sec. 301.7701(b)-7(a)(1); and
    (4) The alien then becomes a resident of the United States before 
the close of the third calendar year beginning after the individual's 
residency termination date in the initial residency period.
    (b) Tax imposed. The tax provided for under paragraph (a) of this 
section will be imposed for the intervening period of nonresidency only 
if the amount of tax would exceed the amount of tax that would be 
imposed under section 871, relating to the taxation of nonresident 
aliens.
    (c) Example. The following example illustrates the application of 
this section.

    Example. B, a citizen of foreign country F, enters the United States 
on April 1, 1985, as a lawful permanent resident. On August 1, 1987, B 
ceases to be a lawful permanent resident and returns to country F. B 
meets the initial residency period requirement because he is a resident 
of the United States for at least 183 days in each of three consecutive 
years (1985, 1986 and 1987). B returns to the

[[Page 667]]

United States on October 5, 1990, as a lawful permanent resident. 
Because B became a resident of the United States before the close of the 
third calendar year (1990) beginning after the close of the initial 
residency period (August 1, 1987), he is subject to tax under section 
877(b) for the intervening period of nonresidency, August 2, 1987 
through October 4, 1990, if the amount of the tax imposed under section 
877 is more than the tax imposed under section 871.

[T.D. 8411, 57 FR 15250, Apr. 27, 1992]