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{
    "localId": "1554456",
    "label": "Puerto Rico - Compact of Permanent Union, November 7, 1975",
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    "citationUrl": "https://catalog.archives.gov/id/1554456"
}

{
    "id": "1554456",
    "sourceUrl": "https://catalog.archives.gov/id/1554456",
    "contentType": "document",
    "title": "Puerto Rico - Compact of Permanent Union, November 7, 1975",
    "citationUrl": "https://catalog.archives.gov/id/1554456",
    "collections": [
        "White House Special Files Unit Files",
        "Issue Decision Papers for the President"
    ],
    "subjects": [
        "Puerto Rico",
        "Intergovernmental relations",
        "Territories and possessions"
    ],
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    "naId": 1554456,
    "coverageEndDate": {
        "day": 14,
        "logicalDate": "1976-01-14",
        "month": 1,
        "year": 1976
    },
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        "logicalDate": "1975-10-01",
        "month": 10,
        "year": 1975
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{
    "seq": 32,
    "pageIndex": 0,
    "type": "photo",
    "url": "https://s3.amazonaws.com/NARAprodstorage/lz/presidential-libraries/ford/grf-0010/569572/1554456/1554456_Page_33_Image_0001.jpg",
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    "ocrText": "- 3 -\nSection 4\nThis section should be carefully restudied and redrafted.\nThe thrust of the provision is unclear in the light of present\nincome tax provisions of the Code. We would recommend that this\nsection be drafted to provide that the income tax laws presently\nin effect will remain in force except as may specifically be\nprovided to the contrary. Exceptions should then be carefully\nand specifically stated. Our specific objections to this section\nare summarized below.\n1. It is unclear whether Puerto Rico would continue to be a\npossession for purposes of the Code. Section 7701(c) of the Code\npresently provides as follows:\nSec. 7701. Definitions.\n\"(c) Commonwealth of Puerto Rico. Where\nnot otherwise distinctly expressed or manifestly\nincompatible with the intent thereof, references\nin this title to possessions of the United States\nshall be treated as also referring to the\nCommonwealth of Puerto Rico.'\nEven in the event Puerto Rico is to continue as a possession, this\nparagraph (c) must be modified to refer to Puerto Rico as the Free\nAssociated State of Puerto Rico. A number of other income tax\nprovisions of the Code would also have to be amended to change\nformal references to Puerto Rico or reconsidered in view of the\nproposed compact.\n2. Section 931 of the Code provides an exclusion from gross\nincome for United States corporations carrying on a trade or\nbusiness in Puerto Rico but only if certain conditions are satisfied.\nSuch corporations may often be treated as resident in Puerto Rico\nby virtue of having engaged in business in Puerto Rico and, as such,\nwould be exempt from United States taxation of income from sources\nwithin Puerto Rico under section 4(b) without satisfying the\nconditions of section 931.\n3. Section 4(b) would provide that the Federal income tax may\nbe imposed only on the U.S. source and the foreign-source income\nof Puerto Rican residents, and that in computing the Federal income"
}