 § 1.446-3(e)(2)(i)).In general, amounts paid or received under an NPC are treated as ordinary income (and not capital gain) for U.S. federal income tax purposes, and are sourced by the residence of the recipient (e.g., if a non-U.S. resident receives a payment under an NPC, that payment is, in general, treated as non-U.S. source income for U.S. federal income tax purposes).The usual result of this treatment is that non-U.S. persons can receive payments on an NPC without outbound U.S. federal income tax withholding tax being applied.