From 1 January 1997, when the "check-the-box" regulations became effective, to May of this year, 5,865 entities have filed elections to be treated as domestic partnerships and 4,140 entities have filed elections to be treated as foreign partnerships for federal income tax purposes. Partnerships, both domestic and foreign, are being used to hold a broad range of investments and may serve as derivative financial products themselves. The sale of a partnership interest may produce US tax consequences that differ greatly from the consequences that would arise on a sale of the assets held by the partnership. This excellent article focuses on the source of income rules for international transactions.