source scholarship or fellowship grant received by a nonimmigrant in "F," "J," "M," or "Q" status is treated as effectively connected with a trade or business in the United States. You are considered to be engaged in a trade or business in the United States if you are temporarily present in the United States as a nonimmigrant on an "F," "J," "M," or "Q" visa.The following categories of income are usually considered to be connected with a trade or business in the United States. In limited circumstances, some kinds of foreign source income may be treated as effectively connected with a trade or business in the United States. Business Activities Test - The activities of that trade or business conducted in the United States are a material factor in the realization of the income.assets used in, or held for use in, the conduct of a U.S. The Asset-Use Test - The income must be associated with U.S.Certain kinds of investment income are treated as ECI if they pass either of the two following tests:.
This applies whether or not there is any connection between the income, and the trade or business being carried on in the United States, during the tax year.
Generally, when a foreign person engages in a trade or business in the United States, all income from sources within the United States connected with the conduct of that trade or business is considered to be Effectively Connected Income (ECI).