- 95 -
trade or business within the United States. The parties there-
fore agree on brief that in the event we were to sustain respon-
dent's theory that the interest that was, in form, paid to
Bangkok Bank LA branch and Union Bank by Radcliffe and/or BOT
was, in substance, paid to those foreign corporations, that
interest would satisfy the general rules for taxation under
section 881(a) and withholding under section 1442(a) (unless the
portfolio interest exemption under section 881(c)(1) were ap-
plicable) in that it was from sources, and was not effectively
connected with the conduct of a trade or business, within the
United States. The parties also agree on brief that in the event
we were to sustain respondent's theory that the interest that
was, in form, paid to Horbury by BOT in 1984 does not qualify for
exemption from U.S. tax under the United States-Netherlands
income tax treaty in effect for that year, Convention With Re-
spect to Taxes, Apr. 29, 1948, U.S.-Neth., art. VIII(1), 62 Stat.
1757, 1761, modified by Supplementary Convention, Dec. 30, 1965,
art. VI, 17 U.S.T. 896, 901 (U.S.-Netherlands treaty), that
interest would satisfy the general rules for taxation under
section 881(a) and withholding under section 1442(a) (unless the
portfolio interest exemption under section 881(c)(1) were appli-
cable).
Hereinafter, (1) Intercontinental, Traveluck, Double Wealth,
Merit, Pempire, Forward, Pioneer, Multi-Credit, and Mandalay will
be referred to collectively as the foreign corporations pledging
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