The capital gains income of: nonresident alien students, scholars, and employees of foreign governments and international organizations may be taxed in a different way than the capital gains income of other nonresident aliens.
The following discussion assumes that the capital gains in question are not effectively connected with the conduct of a trade or business in the United States.
Most foreign students, foreign scholars, and alien employees of foreign governments and of international organizations in the United States are considered to be “exempt individuals.” That is, they are exempt for extended periods of time from counting days of presence in the United States for the purposes of determining whether they are resident aliens of the United States.
Thus, most foreign students, foreign scholars, and the alien employees of foreign governments and of international organizations in the United States remain nonresident aliens in the United States for extended periods of time.
A flat tax of 30 percent was imposed on U.S. source capital gains in the hands of nonresident alien individuals physically present in the United States for 183 days or more during the taxable year. This 183-day rule bears no relation to the 183-day rule under the substantial presence test of IRC section 7701(b)(3).