Qualified business unit exception
(b) Qualified business unit exception. The source of income from a qualified fails charge shall be determined by reference to the residence of a qualified business unit (as defined in section 989) of a taxpayer if (1) The taxpayer's residence, determined under section 988(a)(3)(B)(i), is the United States; (2) The qualified business unit's residence, determined under section 988(a)(3)(B)(ii), is outside the United States; (3) The qualified business unit is engaged in the conduct of a trade or business in the country where it is a resident; and (4) The transaction to which the qualified fails charge relates is attributable to the qualified business unit. A transaction will be treated as attributable to a qualified business unit if it satisfies the principles of 1.864-4(c)(5)(iii) (substituting qualified business unit for U.S. office).