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transactions income (other than the two items of income from the
Guadalajara office) was from sources outside the United States.
Petitioners bear the burden of proving that the income derived
from sources outside the United States, Rule 142(a), and have not
met that burden. Accordingly, we do not reconsider our holding
that "the remaining currency exchange transactions income is
treated as income from sources within the United States."
Petitioners also argue that the currency exchange
transactions income should not be taxed as effectively connected
income pursuant to section 864(c) because INC's role in the
transactions was only as a bookkeeper, not as "a material factor
in the realization" of LTD's income. Petitioners contend that
the act of contacting institutions for exchange rates is
mistakenly attributed to INC when in fact that was the role of
the promoter in Mexico.
Contrary to petitioners' argument, we believe that our prior
opinion correctly attributes to INC the act of contacting
institutions for exchange rates. In our prior opinion, we
concluded that the activities of LTD's trade or business relating
to LTD's U.S. source income included "contacting institutions for
exchange rates and depositing or withdrawing dollars or pesos."
INC was involved in making those contacts on behalf of LTD. As
we stated in our prior opinion, we were addressing the U.S.
source income of both types of currency exchange transactions
that LTD performed: currency swaps and currency transactions.
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