Bona fide resident
(4) Bona fide resident (i) With respect to a particular possession, means (A) An individual who is a bona fide resident of the possession as defined in 1.937-1; or (B) A business entity organized under the laws of the possession and taxable as a corporation in the possession; and (ii) With respect to the United States, means (A) An individual who is a citizen or resident of the United States (as defined under section 7701(b)(1)(A)); or (B) A business entity organized under the laws of the United States or any State that is classified as a corporation for Federal tax purposes under 301.7701-2(b) of this chapter. (5) Source. The rules of 1.937-2 will apply for determining whether income is from sources within a possession. (6) Effectively connected income. The rules of 1.937-3 (other than paragraph (c) of that section) will apply for determining whether income is effectively connected with the conduct of a trade or business in a possession. (7) Indirect ownership. The rules of section 318(a)(2) will apply except that the language 5 percent will be used instead of 50 percent in section 318(a)(2)(C).