- 100 -
that, "In cases such as these * * * [regarding whether the
taxpayer is engaged in trade or business within the United
States], it is a matter of degree, based upon both a quantitative
and a qualitative analysis of the services performed, as to where
the line of demarcation should be drawn." Id. In Scottish
American, the Court decided that the factors to be examined were
the "character" of the activities performed in the U.S. office,
"the purpose for which the office * * * [was] established", and,
to a lesser extent, "the volume of the activities". Id.
In Spermacet Whaling & Shipping Co. S/A v. Commissioner, 30
T.C. 618 (1958), the Court addressed whether the taxpayer, a
foreign corporation, was "engaged in trade or business within the
United States" within the meaning of section 231(b) of the 1939
Code, as amended. In interpreting former section 231(b), the
Court stated:
We have consistently held that before a taxpayer
can be found to be "engaged in trade or business within
the United States" it must, during some substantial
portion of the taxable year have been regularly and
continuously transacting a substantial portion of its
ordinary business in this country. * * * [Id. at 634
and n.10 (citing, inter alia, European Naval Stores
Co., S.A. v. Commissioner, supra, and Scottish American
Investment Co. v. Commissioner, supra).]
After summarizing the test pursuant to former section 231(b), the
Court concluded that the taxpayer was not "engaged in any
substantial, regular, or continuous ordinary business activity in
the United States." Id. at 634.
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