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Sales or Exchanges of Capital Assets: U.S. Taxes for Noncitizens (2025 IRS Guide)

This guide covers “Sales or Exchanges of Capital Assets” within u.s. taxes for noncitizens. The following material presents the IRS treatment of this topic, including the qualifications, exceptions, and examples in the source section. Read the rules alongside the facts of your own situation before deciding what to report, deduct, or document.

Adapted from Publication 519 (2025), U.S. Tax Guide for Aliens, published by the Internal Revenue Service. This guide retains the source edition’s years, amounts, deadlines, and examples. It is guidance for that edition, not a statement that the same figures apply to every tax year.

Context for these rules

Tax at a 30% (or lower treaty) rate applies to certain items of income or gains from U.S. sources but only if the items are not effectively connected with your U.S. trade or business.

Sales or Exchanges of Capital Assets

These rules apply only to those capital gains and losses from sources in the United States that are not effectively connected with a trade or business in the United States. They apply even if you are engaged in a trade or business in the United States. These rules do not apply to the sale or exchange of a U.S. real property interest or to the sale of any property that is effectively connected with a trade or business in the United States. See Real Property Gain or Loss, earlier, under Effectively Connected Income.

A capital asset is everything you own except:

  • Inventory;

  • Business accounts or notes receivable;

  • Depreciable property used in a trade or business;

  • Real property used in a trade or business;

  • Supplies regularly used in a trade or business;

  • Certain copyrights, literary or musical or artistic compositions, letters or memoranda, or similar property;

  • Certain U.S. Government publications;

  • Certain commodities derivative financial instruments held by a commodities derivatives dealer; or

  • Hedging transactions.

A capital gain is a gain on the sale or exchange of a capital asset. A capital loss is a loss on the sale or exchange of a capital asset.

If the sale is in foreign currency, for the purpose of determining gain, the cost and selling price of the property should be expressed in U.S. currency at the rate of exchange prevailing as of the date of the purchase and date of the sale, respectively.

You can use Pub. 544 to determine what is a sale or exchange of a capital asset, or what is treated as such. Specific tax treatment that applies to U.S. citizens or residents generally does not apply to you.

The following gains are subject to the 30% (or lower treaty) rate without regard to the 183-day rule, discussed later.

  1. Gains on the disposal of timber, coal, or domestic iron ore with a retained economic interest.

  2. Gains on contingent payments received from the sale or exchange of patents, copyrights, and similar property after October 4, 1966.

  3. Gains on certain transfers of all substantial rights to, or an undivided interest in, patents if the transfers were made before October 5, 1966.

  4. Gains on the sale or exchange of OID obligations.

Gains in (1) are not subject to the 30% (or lower treaty) rate if you choose to treat the gains as effectively connected with a U.S. trade or business. See Income From Real Property, later.

183-day rule.

If you were in the United States for 183 days or more during the tax year, your net gain from sales or exchanges of capital assets is taxed at a 30% (or lower treaty) rate. For purposes of the 30% (or lower treaty) rate, net gain is the excess of your capital gains from U.S. sources over your capital losses from U.S. sources. This rule applies even if any of the transactions occurred while you were not in the United States.

To determine your net gain, consider the amount of your gains and losses that would be recognized and taken into account only if, and to the extent that, they would be recognized and taken into account if you were in a U.S. trade or business during the year and the gains and losses were effectively connected with that trade or business during the tax year.

In arriving at your net gain, do not take the following into consideration.

  • The four types of gains listed earlier.

  • The deduction for a capital loss carryover.

  • Capital losses in excess of capital gains.

  • Exclusion for gain from the sale or exchange of qualified small business stock (section 1202 exclusion).

  • Losses from the sale or exchange of property held for personal use. However, losses resulting from casualties or thefts attributable to a federally declared disaster may be deductible on Schedule A (Form 1040-NR). See Itemized Deductions in chapter 5.

If you are not engaged in a trade or business in the United States and have not established a tax year for a prior period, your tax year will be the calendar year for purposes of the 183-day rule. Also, you must file your tax return on a calendar-year basis.

If you were in the United States for less than 183 days during the tax year, capital gains (other than gains listed earlier) are tax exempt unless they are effectively connected with a trade or business in the United States during your tax year.

Reporting.

Report your gains and losses from the sales or exchanges of capital assets that are not effectively connected with a trade or business in the United States on Schedule NEC (Form 1040-NR). Report gains and losses from sales or exchanges of capital assets (including real property) that are effectively connected with a trade or business in the United States on a separate Schedule D (Form 1040) or Form 4797, or both. Attach them to Form 1040-NR.

Using the guidance

Keep the documents that establish the dates, amounts, and circumstances described above. References to other chapters, forms, worksheets, or earlier and later sections refer to the linked IRS publication. Check the full publication and its updates before relying on a rule for a different tax year or a situation not addressed here.

Sources and further reading

The cited U.S. government text is in the public domain. Source accessed October 28, 2026. Fynoptic has organized this material for educational use and is independent of, and not endorsed by, the IRS.

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