TD Ameritrade has a "Fully Paid Lending Income Program" that brokerage clients can join to allow TD Ameritrade to loan out the brokerage clients' shares. Clients are paid a 50% split of the fees obtained by TD Ameritrade when shares are lent to others. Reference: FAQ: Fully Paid Lending Income Program.

If a non-resident alien signs up for the program, how will the income from the program be taxed? How will "substitute payments in lieu of dividends" be taxed? Will the income qualify as "qualified interest" and "portfolio income" such that the tax rate is 0%?

Assume that there is no applicable tax treaty between the non-resident alien's jurisdiction and the US.

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