The Net Election
In order to make the Net Election, the income tax regulations provide that a statement should be attached to the nonresident individual’s tax return (Form 1040NR). The statement should include the following:
• A schedule of all U.S. real property in which the taxpayer owns a beneficial interest;
• The extent of the taxpayer’s direct and beneficial interest in each item of U.S. real property;
• The location of each item of U.S. real property;
• A description of any substantial improvements on each item of U.S. real property; and
The election should be made on the first U.S. tax return for which the net election is to apply. The election need only be made once, and it remains in effect until it is revoked.